Which is the right approach for your business, Outsourcing or Augmentation?
When companies need additional resources to complete large or complex pieces of work, they need to consider how best to bring those resources on board.
Developing in-house capabilities to deliver on every element of work is not always cost –effective nor feasible, and so it’s understandable that companies look for other models of delivery in order to complete work on time and on budget.
This is particularly true for companies delivering on large capital programs or looking for specific project controls solutions, as requirements and workloads can change considerably over the lifecycle of the work.
Two different delivery approaches that are often considered are project outsourcing, and staff augmentation. We take a look at some of the key characteristics and differences between the two.
The differences between Project Outsourcing and Staff Augmentation
Project outsourcing allows a company to subcontract a particular task, element of a project, or whole program, to an external provider. The outcome and deliverables are agreed in advance, staff are employed by the outsourced company, and that company takes on the risk for successfully completing the work.
In contrast, staff augmentation means adding in skilled, experienced members of staff alongside an internal team. These members of staff are specifically chosen due to their expertise in a particular area of work, giving the host company access to specialized resources without the cost and liabilities of taking on new, permanent employees.
Both of these approaches can help deliver success, but which one is right for your business?
The benefits of project outsourcing
- Training and recruitment costs are lowered: Staff are employed by the outsourced provider, saving the hiring company money in terms of finding staff, bringing them on-board, and training them on internal processes.
- Reduce management overheads: Staff are not employed within the commissioning organization, meaning that there are less day-to-day calls on management time.
- Allows the use of a variable cost structure: Instead of incurring fixed employee costs, the outsourcing organization can treat outgoings as variable project costs, allowing variations according to delivery.
The drawbacks of project outsourcing
- Control over delivery doesn’t sit with the commissioning organization: The project outsourcing model means that the responsibility and risk for delivery sits with the outsourced provider. While that can sometimes be helpful, it does also mean that the commissioning organization doesn’t have as much control over elements of work. This can cause concern over whether outcomes will be delivered on time and on budget.
- Staff resistance to outsourcing: While it’s by no means always the case, there can be the perception that temporary outsourcing of deliverables is the first step along the road to permanently moving to an outsourced model, with the loss of full-time employee jobs. This can lead to resistance from internal staff who are concerned about being replaced by the outsourced firm in the longer term.
- Integration with existing IT infrastructure can be tricky: It can be difficult to integrate the IT systems and processes of an outsourced provider with those of the organization outsourcing the work. This is particularly the case where bespoke software is being used, and if the outsourced project is limited in timescale then it often doesn’t make sense to commit the resources to achieve that integration.
The benefits of staff augmentation
- Staff resources can be scaled up or down depending on the delivery phase: With staff augmentation, experienced, trained members of staff are added on an as-needed basis, meaning that the host organization doesn’t need to worry about long recruitment lead-in times or lay-off periods. If a stretching delivery schedule requires a particular area of expertise, augmentation can provide that without any administrative hassle.
- There is good control and oversight of staff and deliverables: Due to the fact that staff are working within existing delivery structures, it’s easier for the commissioning organization to feel confident about progress. Siting experienced personnel in key positions means that milestones are hit and budgets are adhered to, with the added transparency and oversight of having those staff working alongside in-house teams.
- It reduces the need to acquire in-house skills: Delivering project controls solutions requires specific skill sets such as scheduling, estimating, and data integration. These skills take many years to develop, and need continuous training and development to maintain.
A company like DRMcNatty invests heavily in staff training to make sure that our project experts are up to date with the latest techniques on a variety of programs. Bringing in these highly skilled staff to work on specific tasks makes more sense than a company trying to develop the same levels of skills and expertise in-house.
The drawbacks of staff augmentation
- Staff still need management oversight and guidance: Staff brought in on an augmentation model still need to be inducted into the workings of the host organization. This can be successfully and quickly achieved, however, by choosing a reputable augmentation partner with knowledgeable staff who are able to hit the ground running.
- Staff augmentation is a resource-centric, not results-centric, model: With staff augmentation, a business is gaining resources in the form of additional skilled staff, but the onus for ensuring successful delivery of outcomes still rests with the commissioning organization. Again, any risks can be mitigated by ensuring that staff are experts in their field, who are able to bring valuable skills to the table.
Choosing the right partner is critical to success
Whether you choose to use a project outsourcing approach, or make the most of the benefits of staff augmentation, the critical element of success for both is choosing a knowledgeable, capable supplier partner.
DRMcNatty are market-leaders in project controls solutions, and can help with all your outsourcing and staff augmentation requirements. Our expert staff will work with you to scope your requirements and provide the resources you need to succeed. Get in touch today to find out more.