When it comes to creating new software and other technologies, modern companies have the choice of hiring in-house or outsourcing labor elsewhere. Both options have their own distinct advantages and disadvantages, begging the question:

”Should you outsource product development or not?” 

The answer can be more convoluted than you would expect.

Choosing to do offshore software development, for example, will affect how tasks are managed and how individuals collaborate. It’s not uncommon to see companies take a mixed approach, using a combination of in-house hiring, outsourced labor, and staff augmentation to get their product into production.

But what are the differences between staff augmentation and outsourcing? Will they have different impacts on product development? How will you know which approach is right for your business?

Decision: Outsource or Hire In-House?

Let’s focus on outsourcing first. Compared to hiring in-house, being able to outsource software development comes with major advantages such as reducing costs and increasing efficiency. 

The difference in wages and cost of living in various countries means that companies can still get quality work for less than they would pay in their own country. For the outsourced staff member, the ability to earn foreign currency can be highly incentivizing. In some ways, this is a win-win situation.

But how does outsourcing boost efficiency? 

By outsourcing product development, the company can refocus on other core areas of the business such as brand building or research and development for the future. When working with a professional outsourcing partner, they will often also take responsibility for IT functions like DevOps, cloud infrastructure, and other technologies that usually cost the company a lot more if done in-house. 

Pros and Cons of Augmenting Your Staff

There is also the option of augmenting your staff, which is a more specific type of outsourcing pertaining to temporary work. 

Some tasks do not necessarily need a long-term employee to do and it can be more cost-effective for the company to outsource the work on a temporary or even freelance basis. Think about all the time saved in onboarding, training, and money saved on things like paid benefits – augmenting staff will be much more affordable.

Some of the other pros of working with an augmented staff include having more control over tasks and expenditures, allows the company to scale faster into foreign markets, and fill specialized roles more easily.  

In cases where a specialist is needed for one or two projects, using staff augmentation as a strategy will spare the company the effort of recruiting and paying someone full-time. 

To decide whether or not to take the staff augmentation approach, ask yourself this question:

Do you have the organizational maturity and structure to directly manage staff augmentation resources?

Just as there are pros to staff augmentation, there are also cons. 

The first con is that this strategy calls for management overhead than pure outsourcing. If tasks are handled by short-term workers, someone needs to assign them and ensure they are completed according to the requirements. 

Another con that this approach relies on internal processes – the company, rather than the outsourcing partner, is responsible for all stages of product development.

Pros and Cons Of Outsourcing

Similarly, there will be advantages and disadvantages to deciding to outsource product development. 

To determine whether or not to outsource, ask yourself:

Are you concerned with cost advantages, or are you more focused on having a global operation across time zones, a.k.a. ‘follow the sun’?

There are many positives to outsourcing, such as gaining the ability to spend more time on core business initiatives, getting access to skilled workers at lower costs, and lower risk of outages. 

Think about it: by outsourcing your product development or IT needs, the company can tap into several backup servers or other business continuity options. Working with an outsourcing partner means that there will also be access to the latest infrastructures without the cost of internally implementing them.

As for the cons, there are a few of those as well. 

The first can be the waiting times. Unlike having an internal employee, it won’t always be possible to resolve an issue immediately. This can develop into a critical situation if there is indeed an outage, so redundancies must be planned for if you consider outsourcing.

Another potential con is that additional steps will need to be taken to ensure that IT security remains enforced at all times.

How To Weigh Staff Augmentation Versus Outsourcing Product Development

If you’re considering staff augmentation versus outsourcing for your business, consider these questions first:

1. Do you have remote employees that you supervise and manage, or are you handing off business objectives?

Your answer to this question will have a big impact on whether staff augmentation or outsourcing is a better fit for your business. If you want to manage these contractors personally, then staff augmentation might be the best option.

2. Are you willing to pay the additional cost for fully managed outsourcing vs staff augmentation?

This will depend on your goals for your business. Are you looking to offload a single task or work continuously with the same professional? You’ll need to weigh the costs of each compared to what they have to offer in relation to your goals.

3. Where do they see the cost advantages coming from?

The cost advantages of both strategies are similar. Outsourcing allows a company to benefit from expert knowledge, infrastructures, and features without having to expend the costs needed to keep them on full-time. Learn more about the savings associated with working with an offshore software development company.

The Bottom Line

Choosing to outsource labor is a natural step for companies scaling their product development, and there’s no reason why a company cannot choose to use both options. 

It all comes down to the goals the company has and the advantages they are looking to gain by making use of these strategies. Staff augmentation and outsourcing have some similar traits but offer very distinct uses to businesses that are looking to bridge the gap without recruiting and hiring someone who works full-time.

Opsumo can easily take care of all of your offshore IT consulting needs. Take a look at how we can help you benefit from world-class knowledge at affordable costs.