IT staffing offers different models based on the varying specifications of organizations. Here, we’ll discuss staff augmentation vs contingent labor and why it is crucial to choose the right IT staffing model for a business to achieve its objectives.
IT staffing has gained popularity over the years. Every business needs IT professionals to manage the tech infrastructure and maintain the network of systems and connections. From a startup to a large enterprise, businesses have diverse IT requirements, depending on their industry standards, mission, vision, and objectives.
Staff augmentation is a hiring or staffing model used by many businesses from around the world. It allows an organization to strengthen an existing team by temporarily hiring experts from outside. The services are offered by staffing companies that provide tailored teams as per the client’s requirements.
According to Business Research Insights, the IT staff augmentation and managed services market size was $339.96 billion in 2024 and is projected to reach $1218.86 billion by 2033 at a CAGR (compound annual growth rate) of 13.7%.
Contingent labor is another type of IT staffing model used by organizations. It is similar to staff augmentation but focuses on varied roles and responsibilities. While augmented teams are useful in some situations, contingent management is a better solution in others. In this blog, we’ll read in detail about the differences between staff augmentation vs contingent labor. We will also explore the risks associated with choosing the wrong IT staffing model.
Though staff augmentation and contingent labor are IT staffing models that provide outside talent to fill the gap in a business, their purposes, scope, and vision are different.
So, what is the difference between staff augmentation and contingent labor?
Staff augmentation is the process of temporarily hiring a professional to join an internal team in a business to work on a specific project or provide expertise for certain roles. For example, if an organization wants to build an AI product, it can create a team of existing employees and expand it by adding AI developers and ML engineers from outside. These experts will work with the employees until the product is ready and released into the market. Once done, the project ends, and the external professionals will exit the team. Ideally, businesses hire talent from IT staff augmentation companies to ensure they get some of the best and most experienced people for their projects.
Contingent management or contingent labor is also a temporary hiring solution to expand the workforce. However, it caters to diverse roles instead of being limited to important domains. Additionally, contingent labor is used to handle excess workload, sudden demand, etc. For example, a business notices the possibility of higher demand for a product. To take advantage of this, it hires temporary staff to increase production or manage other activities. Once the business achieves its goal, it will let go of the excess staff and run the operations as before.
Between staff augmentation vs contingent management, it is hard to say which one is the best choice for IT projects. The answer depends on the organization’s requirements, budget, and limitations.
IT staff augmentation is a better choice for expert roles, short-term projects, and complex needs. Contingent management is more suitable for simple long-term projects that don’t require special skills but need extra labor to finish the tasks on time.
Both methods are cost-effective, flexible, and scalable. But is staff augmentation more cost-effective than contingent hiring?
In a way, yes. IT Staff augmentation is more cost-effective than contingent management, especially for short-term projects. That’s because it has a faster hiring and onboarding process due to the smaller number of talent required to fill the roles. It is also more scalable than contingent labor.
Many businesses have questions about mixing up two IT staffing models. A common question they ask is if you can mix staff augmentation with contingent labor?
Of course, yes! Staff augmentation and contingent labor models can be mixed since they are both staffing processes and involve the use of temporary employees/ professionals to work on the given tasks/ projects. How a business mixes the models can differ based on its budget and other parameters. Or, an organization can use contingent labor to fill certain jobs and rely on IT staff augmentation for other roles. Both processes can be kept separate but used as required to achieve the business goals.
IT staffing comes in various types and is a part of the larger outsourcing business model. Despite the similarities, there are specific differences between the sub models, making it necessary for a business to be aware of how each of them works. This knowledge is essential to make the right decision.
Staff augmentation services and staff supplementation are used interchangeably by many businesses. However, they are not exactly the same. Staff augmentation is a type of outsourcing model, where the external employees work with the in-house team of a business. It is done to include domain-specific professionals and experts to work on a project or bridge the talent gap without hiring new employees. They focus on specific tasks and have fixed team roles and responsibilities to fulfill. Think of it as bringing an experienced external candidate to resolve a problem or fulfill a project within the required schedule.
Supplementation is used to fill generic roles to help a business stay on schedule or handle excess workload temporarily. Typically, the current workforce cannot handle additional workload during peak times or when there’s a new project that needs immediate attention. In such instances, temporary employees are brought in to work for the business until the rush subsides and the demand levels are normal again. Also, the temporary workers could belong to any level and are not necessarily specialists.
Staff augmentation and statement of work are both outsourcing models where a vendor provides an external team to work for a business and fulfill the requirements. Staff augmentation is a flexible model where an organization can expand its in-house team by adding temporary external talent to fulfill specific roles.
A statement of work is a formal contract or an agreement between a vendor and client that outlines the details of the project, the services provided, the timeline, and the payment. Statement of work is also known as SOW and is a great choice for complex projects where details play a vital role. For example, if an enterprise wants to have a clear picture of the project guidelines, cost, timeline, structure, roles, responsibilities, technologies, etc., then it should opt for SOW instead of staff augmentation. This will increase transparency and reduce the risk of misunderstandings between the parties.
If an organization wins a high-value project and needs more employees to work on it, the statement of work model helps gain the much-required clarity about how much the project will cost, when the payments have to be made, what the deliverables will be, and so on. This ensures that both parties can monitor the progress and align the outcomes with the expectations.
Another difference is that the SOW teams may or may not work in-house teams. The definition of staff augmentation makes it clear that a business will augment or extend/expand its existing team by adding external professionals. In a statement of work, the new team built by the vendor can collaborate with the in-house team or work independently. The existing in-house team will continue to focus on its objectives.
Whether it is IT staff augmentation, supplementation, SOW, or contingent labor, each model has its advantages and disadvantages. While all of them are worthy and help a business bridge the talent gap, choosing the wrong staffing model can be risky and counterproductive.
Here are a few risks an organization may face when it chooses the wrong IT staffing model:
Considering the differences between staff augmentation vs contingent labor, choosing one IT staffing model for the other can result in a misalignment of services and requirements. For example, hiring entry-level candidates for a project that requires expertise can affect the deliverables and the outcome of the project. The time and other resources spent on the project will be wasted. The business is also likely to miss opportunities due to the inexperience of the team members.
Budget concerns are real for every business. One of the main reasons to opt for IT staffing models is to hire talent for a cheaper price and save money spent on the recruiting process. However, choosing the wrong model can increase the costs in various ways. For example, undervaluing the project could result in unseen expenses as new issues crop up often. Hiring fewer or excess candidates can affect the work as well as the budget. The pricing for each model is distinct and customized for the business requirements. Incorrect selection makes the pricing models obscure and increases hidden costs.
Every staff augmentation company has a screening process to select hires for its clients. This process is typically determined by the type of services/ roles provided by the candidates. For example, the screening process for regular IT jobs may not be as stringent as the one for staff augmentation or statement of work. This can result in greater inefficiency if a business chooses the wrong model. Unqualified hires can result in higher turnover rates since the organization has to replace them with better talent. If it continues to work with them, the outcome can be of lower quality.
IT staff augmentation companies specify their expertise in different industries. While some service providers work with businesses from most industries, some are limited to certain sectors. Conversely, contingent labor companies have a wider reach but without exclusive industry experience since they provide talent to fill generic roles. For example, a business needs a patient care data management dashboard using Power BI. This is the job of an expert like a Power BI developer who also understands the intricacies, standards, and regulatory laws in the healthcare industry. If the hospital hires anyone else for the task, the results can be unfavorable. Moreover, the hospital will have to spend more time and money training the temporary employees.
A wrong staffing model or a business partner may not offer the flexibility and agility the project requires, especially when it comes to adopting new technologies. This can affect innovation since the new candidates may not have the required expertise to think differently or try something new. Similarly, scalability can also be a concern. The team could struggle with making quick decisions or taking calculated risks. Moreover, following outdated processes can extend the project timeline beyond the deadline.
IT staffing services are a partnership between two or more parties. However, the extent of collaboration depends on the model chosen. For example, in contingent vs staff augmentation, the former is where the external team may or may not work with the in-house employees. However, in staff augmentation, the external talent has to constantly communicate with other team members. Choosing an incorrect model could result in miscommunication, confusion, repetition, and inefficiency.
The products and services offered by a business represent its brand identity and reputation. By delegating a part of its work to a third-party, the business cannot compromise on quality or it would have a negative impact on its market value. When an organization chooses the wrong staffing model, it could ultimately affect customer experience and its brand reputation in the market.
Knowing the similarities and differences between staff augmentation vs contingent labor will help enterprises make the right decision to bridge the talent gap and add external employees to the business. Talk to IT staffing companies about the project details, budget, scope, and everything else to come up with a comprehensive strategy for hiring temporary candidates. There is no blanket rule when using IT staffing solutions. Do what’s best for the project and the business.
An IT staff augmentation service provider offers tailored solutions for business enterprises to hire extra talent and expand their teams as and when necessary. With flexible pricing, scalable recruitment models, and innovation, the services are aimed at helping organizations gain a competitive edge and achieve their goals through cost-effective staffing models.
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Fact checked by –
Akansha Rani ~ Content Creator & Copy Writer
