Staff Augmentation and Managed Services—Choosing the optimal outsourcing model for your enterprise

Lukasa Insights

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Choosing the optimal outsourcing model for your enterprise

The convergence of several key factors is bolstering a significant trend in business—technology outsourcing through staff augmentation and managed services.

Today, companies of all sizes across virtually every sector are feeling the squeeze of a double bind: in a moment when modernization and digital transformation are more important than ever before, many organizations don’t have the in-house staff and internal resources to manage urgent technology initiatives—yet recruiting employees in the tech industry is increasingly difficult.

The notorious tech talent shortage in the U.S. involves not just developers and data scientists, but the whole technology sector. Finding and hiring the right specialists can be costly and time-consuming.  

In addition, the way we work has changed dramatically over the last few years, impacting companies’ ability to hire full-time tech employees. As CIO magazine explained earlier this year,  

MBO Partners’ “11th Annual State of Independence in America” report calculated a 34% increase in the number of individuals opting for independent work, with figures going from 38.2 million in 2020 to 51.1 million in 2021….Meanwhile, the “2022 State of Enterprise Tech Employment” report from Motion Recruitment found that 42% of the total workforce are 1099 workers, independent contractors, or freelancers and that 90% of companies are moving to a blend of full-time and freelance employees. The study further noted that “30% of digital leaders plan to increase the use of statement-of-work contracts, and 35% plan to increase the use of contractors in 2022.”

The good news is that companies can use this to their advantage. As enterprise leaders increasingly lean into leveraging a mix of full-time employees and contractors, they gain access to a global pool of talent for high-demand skill sets and hard-to-hire roles—as well as a wealth of other benefits including greater flexibility and scalability, increased speed and efficiency, decreased costs, and a more satisfied, engaged, and productive workforce. Outsourcing can provide the agility an enterprise needs to stay competitive and satisfy customers in a rapidly evolving digital market.

The two main forms of outsourcing partnership—staff augmentation and managed services—offer many of the same benefits, but they’re essentially opposite approaches. 

Staff augmentation refers to outsourcing specific functions and tasks while keeping a project under the organization’s own management. It’s an input model that allows a business to bring in outside staff on a temporary basis—experts with specific experience and skill sets who adapt to the company’s culture and project roadmap. This form of outsourcing saves money on the recruiting and onboarding process, the resource costs associated with a full-time hire (hardware, space, etc.), and most importantly, in the ability to scale a team as needed. This model is especially well suited to small and midsize organizations requiring support and expertise for individual shorter-term projects, or when they need a long term tech partner for a discrete role.

Managed services is an output model in which an entire technology project or process is outsourced to a third party to manage and execute. The parent company provides the outside partner with specs and parameters, and they agree on goals and deliverables. From there the third party provider handles the project as a whole—from people and workflows to training and tools. This model typically works best for longer term, more labor-intensive projects, when a company needs significant support for a major technology initiative.

Either approach can empower an organization’s existing team by reducing the ways in which they’re currently multitasking to cover gaps, and freeing them to focus on what they do best while specialists address particular needs.

Both models also help a company to bring top tech talent to their project—seasoned pros that focus on contract projects because they value engaging work, new challenges, flexibility, and independence over permanence. By outsourcing, businesses can not only draw on a much wider talent pool, but also a greater range of expertise, more diverse voices, and innovative thinkers. 

Neither strategy is inherently superior, or right for every situation. The model that works best for an organization depends on their project type, its specific demands, and scale. It’s also a matter of preference—how much autonomy and direct control of the project the enterprise leaders wish to retain.

What’s certain is that we are at an inflection point—the future of work is being reimagined in real time, and it’s clear that outsourcing will play a pivotal role in companies’ growth and competitiveness in today’s rapidly evolving market. Whichever outsourcing model is the best fit for your business, finding the right partner is key.

At Lukasa, we specialize in helping companies define their operational and technological needs through expert process analysis and a modern lens. As specialists in multiple industries, we have a complete crew at the ready and will scale a team to meet your initiative’s precise demands.

We take a partnership approach to every project, working closely with each client to strategize and seamlessly implement the most effective custom outsourcing solutions.

About Lukasa -
Lukasa empowers small-to-medium-sized businesses by designing and implementing custom business and technology solutions that drive efficiency, productivity, and innovation, enabling them to stay ahead in today’s rapidly-changing competitive landscape.