Project-based consulting vs. staff augmentation

Differentiating a staffing firm from a contractor is a key distinction when determining which option is best for your enterprise. Staffing firms provide a wide range of skills while contractors specialize in one or a few things, allowing you to get what you need without putting an entire team on that work order.

Project-based consulting vs. staff augmentation
Project-based consulting vs. staff augmentation

Whether you’re a large enterprise or a small start-up, outsourcing your information technology services can be a smart move. But there are plenty of options available to businesses—so how do you decide which is best for your enterprise?  Both can present advantages in certain situations—but they also have disadvantages when compared side by side. By understanding each model’s pros and cons, business leaders can make more informed decisions when selecting from these options in order to align their resources with their specific needs. Let’s take a look at some of the Advantages & Disadvantages of each offer.

Advantage of staff augmentation

Your company hires individual consultants who augment your in-house team for any number of projects, both large and small. When those projects are complete, they leave. This gives your business control over how many people are brought on board at any given time, which allows it to meet fluctuating demands.

As your business expands, your technology team needs to expand as well. You can either invest in growing your own technology department, or you can choose to hire consultants for short-term projects. An alternative is staff augmentation: a mix of both solutions that lets you stretch your existing IT staff more efficiently without breaking their brains over constantly changing projects. To learn more about staff augmentation advantages read on.

  • Cost-effectiveness

Staff augmentation providers will cost less for long-term projects compared to on-site consultants. Furthermore, their pricing scales with volume, meaning your rate will be cheaper if you hire more workers from a given vendor. For example, Accenture’s Hourly Basis Hourly Consultant starts at $61.67 per hour. You can add up to 3 additional members of staff to work alongside one consultant; additional employees cost up to 31% less than hourly rates alone. The same pricing applies across all four countries where it operates: USA, Mexico, India, and China.

  • Flexibility

You can tap into a global network of highly qualified consultants with specific skills. This allows your company to address short-term needs for specific projects or initiatives. If your company is small, there may not be a dedicated IT department to handle these projects, but with an IT staffing firm, you can bring in multiple experts from various disciplines as needed. When you don’t need them anymore, they will go back home. This saves your company money and prevents any long-term commitments.

  • Control

Staff augmentation allows you to handpick your team members. This flexibility is attractive because it gives you more control over who works for your organization, where they work, when they work, etc. For example, if one of your technical leads decides to leave their current position for a new job in another state, you can choose to replace them with a member of your staff augmentation pool rather than conducting a large-scale search for a permanent replacement.

  • Lower risk:

Hiring a full-time employee can be risky. You’re committing to a single person with specific needs, such as office space or equipment, when in fact your business may need different resources at different times. Staff augmentation companies don’t make such long-term commitments; they only assign employees when needed. This flexibility allows them to provide more value for less risk. And because most of their employees are contractors rather than full-timers, staff augmentation firms have an easier time attracting new talent without having to worry about finding new jobs for ex-employees.

  • Counteracting attrition:

Staff augmentation also acts as a great deterrence If your business is going through a hard time or is going through some massive changes, it can be very difficult to retain employees. When these additional workers are working on important projects, they will feel committed to their jobs, which will increase retention rates.

This is especially helpful in fast-paced environments, where it can be difficult to fill critical positions quickly enough to keep up with demand. And if you’re willing to give your permanent employee some time off from work while a temporary employee fills his or her shoes, even better! Your revenue won’t take any hit from hiring talent without previous experience because there isn’t really a gap period for your team after a new hire starts work—even though he or she will undoubtedly need some ramping uptime.

Disadvantages of Staff Augmentation

An important aspect of project-based consulting is that it forces companies to live with each other for extended periods of time. This can cause friction if things are not well-coordinated, leading to subpar results. Additionally, there are always people who are more skilled at their job than others—meaning some sub-contractors will finish projects quicker than others. When working with a team on a project, these disparities can cause problems as work slows down for those who aren’t as quick at their jobs.

  • Training

Staff Augmentation is not staffed by full-time, in-house employees. Staff Augmenters are consultants who work on a project-by-project basis. Because of their transient nature, it’s difficult to build up institutional knowledge within your organization because they will likely be replaced soon. This can create difficulties when attempting to maintain consistency across projects that require different skill sets, or if one specific person was key to a project that went well.

  • Management Capability

First, it’s difficult to expect to have day-to-day visibility into a contractor’s performance or to get clear answers on progress. This is especially true when your company’s employees are providing remote support, but it can also happen with onsite contractors. There may also be issues related to the roles and responsibilities of your own employees who may not feel comfortable telling a contracted employee what to do or how he or she should do their job.

  • Integration with Team

A contract employee is a temporary fix in place of a permanent solution. The right staffing company will have a pipeline of talent from which they can select to fit any type of staffing need, but when it comes to integration, having them become part of your team doesn’t happen easily. In fact, if you want them to fit in seamlessly it is going to take time for both parties to adapt.

When there is no room for growth in their current position, these employees may find themselves frustrated by their lack of potential and leave to look elsewhere for fulfillment. For highly specialized IT roles that are hard to fill, consulting firms may be willing to spend more time training employees upon company-specific systems. However due to shorter-term contracts, often there isn’t enough time or money dedicated to providing full integration into an organization.

When should I use project-based consulting?

Most enterprise organizations are concerned about one thing above all others, growth. For most businesses, there is no greater threat to their growth than inadequate technology capabilities. When your company grows, your technology needs to grow with it – but many small business owners aren’t sure how to go about that. It’s for that reason that project-based consulting can be a valuable option for any growing business or enterprise organization.

Advantage of project-based consulting

  • Time-Saving

With project-based consulting, you are not investing in one long-term contract. This means that your company won’t have to go through a full year of up-front planning only to realize there was no need for services in quarter four or five. Instead, businesses can get started immediately and focus on what they do best.

  • Cost-Effectiveness

If your goal is to keep costs as low as possible, then contract project-based consulting can help you maintain a lean budget. This works well for businesses that are smaller or newer because they do not yet have permanent staffing needs. Also, project-based services can be reduced or eliminated when staffing levels are adequate. Customization: With consultants on board with short-term agreements rather than permanent positions, businesses can customize their IT staffing options to meet changing needs.

  • Manageable Infrastructure

Hiring your own permanent team will require managing infrastructure. A project-based consulting service provider takes care of these issues. With their expertise in providing high-end business solutions, they take responsibility for all technical aspects including installation of hardware, network connectivity, maintenance of software, etc. Customization to Corporate Environment: Some organizations don’t want changes to be made on their core systems by outside vendors. Hence project-based consulting helps organizations customize projects according to their own needs without altering their existing system structure.

  • Proactive Approach

A project-based consulting company will take a proactive approach to your project. They will come into your environment and identify areas that need improvement or change. You can then choose how much work you want them to tackle at one time. There is no long-term commitment with a project-based consultant so they can scale their services as needed.

  • Project Assurance

Here is where a strategic project management service comes into play. It ensures that all of your projects are completed on time, within budget, while delivering high-quality results for you or your business. This also helps in leading healthy competition between vendors to reduce prices and increase competition in order to provide better services at more affordable rates for you or your business. This approach maximizes control over solutions delivered by independent software vendors (ISVs) thereby improving quality assurance procedures.

Other advantages include support with vendor selection, reduced training costs, reduced product installation costs, faster response to changing needs due to reduced technology integration costs. Services are generally billed per hour or per month. Typically one main point of contact will oversee all aspects of the development process from beginning to end including planning, design phases as well as final production.

The disadvantage of project-based consulting

When choosing to work with a project-based consulting firm, you give up the value of having full-time employees who are dedicated to your organization. On top of that, there is no guarantee they will still be working for your business after their contract ends. They could leave for any reason at any time (even within your contract period), leaving your business with gaping holes in its infrastructure.

The industry average retention rate among consultants is less than two years, according to The Information Technology Association of America. This means it’s more likely you’ll have to hire other consultants before your original contract expires.

  • Availability

The consultants of Project-Based Consulting Companies are not dedicated to your organization. They can be taken up on projects by any organization. It becomes quite difficult for organizations to grow since they do not have regular contact with their dedicated consultants and cannot build working relationships with them. Their experience is solely limited to that particular project. Whereas, in the case of Staff Augmentation, firms provide full-time services to their clients so it’s very convenient for them since they can easily involve themselves in one project at a time making it very flexible as compared to Project-Based Consulting companies where it’s very tough because there are many other clients involved too.

  • Time spent with your team

The project-based consulting industry, in general, is notorious for not spending enough time in-house working with its client’s teams. While we believe we do a better job than most, we can never forget that there is a big difference between our competitors and us in terms of how much time each spends with our clients’ teams.

  • No, Follow Up

If you hire a project-based company, they will usually use out-of-scope personnel. When I say out-of-scope personnel, I mean people who are not dedicated to your company. This means that when they leave your office for a home for whatever reason they stop working on your project even though they were supposed to get something done. Next time you will get someone else doing that work that is not familiar with what’s already been done

  • Lack of knowledge

Experienced consultants might be able to mitigate risk by bringing their expertise into your environment, but they can’t stay on for long enough to truly understand what you need. They also lack a stake in your company, which means that if something goes wrong with a project it could put your relationship at risk. And lastly, they’re usually more expensive than full-time employees because contractors cost more money.

  • You may get something that is not what you wanted

You hired a web development company to create your website, so you would need it to be related to your niche. However, they might create a website for fun. If it does not match your niche then you should reject it. This might cause frustration among other things. The cost factor of project-based consulting. It’s expensive than staffing solutions because most companies do not hire full-time employees for short periods of time. But with staffing services, the cost is predictable so there are no surprises.

  • Liability

When using a consultancy firm to perform work on your behalf, there is always some risk that they may not do things correctly. Also, some smaller businesses may not have legal departments or other resources that can deal with large lawsuits. If you rely on third-party consultants for many of your day-to-day operations, it can be difficult to protect yourself legally in case something goes wrong.

  • Risks

Project-based consulting is a relatively new concept, often involving novel technologies that are unfamiliar to clients. It requires significant investments on both sides. This arrangement may only work for high-risk, high-reward projects. If your company doesn’t fit into one of these categories, it may be better off retaining existing resources or hiring permanent staff members.

  • Reimbursement

Project-based consulting contracts are based on the time charged for each hour of work. This may not be ideal if they ask for more hours than anticipated by your project, which can end up costing you an over-budget. An advantage of hiring permanent employees is that there is no risk to hiring more people than required by a project, as expenses are fixed and do not fluctuate.

  • Conflict of interest

Because consultants are continuously moving from one project to another, they don’t have a vested interest in your company or its success. In other words, project-based consulting can lead to short-term thinking. If their job is simply to deliver at any cost (i.e., make sure that their team completes), it may not matter if they develop sloppy solutions as long as each component is checked off. This way of working increases the risk for errors, which isn’t a good fit for your enterprise.

  • Control factor

Typically project-based consulting comes in phases that are scheduled by your business. You will need to wait for them to return before making any big changes. Since these services are project-based, there is no guarantee that they will be available during specific times throughout your year, so your team may have to work around their availability if they aren’t always needed. Also, since they come in projects where there might be other clients requiring their attention it could potentially delay the completion of your specific project which causes frustration for both parties involved.

  • Lock-in agreement

You are committed to paying for services even if there is no additional work. For example – some companies have taken projects on for 6 months to a year only to find there was no additional work available. So, even though they liked working with their new vendor, they couldn’t stop their services because of long lock-in agreements. The added time it takes for project-based consulting can get in your way of conducting business with other vendors who may need your services immediately rather than six months down the road.

  • Testing and bug fixing

Testing and bug fixing is often postponed until product launch or, worse, discovered by your customers. When working with a project company they usually only allocate X amount of time for development so if something takes more than their set time it can be taken out of scope or just not implemented at all. This leaves large amounts of bugs that need to be addressed in a short turnaround time. Also, most project companies don’t have any security programs in place leaving sensitive information wide open for outsiders to access and use against you.

  • Poor delivery

While it may be possible to get your project completed using a consulting firm, your business will most likely not receive the same level of service as what you would receive with in-house staffing. When working with in-house staffers, your company can create procedures that keep projects on track. With project-based consulting firms, however, schedules are often missed and issues arise where tasks need to be rushed due to lack of proper planning. If you want reliable delivery for your enterprise’s projects, then hiring permanent staff is typically your best bet. It will take time and money upfront to hire new employees, but over time it will save you both money and hassle down the road.

  • Deadlines (Sometimes)

Project-based consulting is subject to time constraints. When an enterprise engages a project-based consulting firm, they are given certain time constraints which need to be adhered to in order for their project goals to be met. Because of these deadlines, projects often go over budget or don’t meet deadlines for submission.

Which one is better: Staff Augmentation vs. Consulting

One option is not necessarily better than another; it all depends on your current situation. If you need flexibility, consider hiring consultants on a project-by-project basis. Staff Augmentation Providers are likely to be more reliable long-term but often require greater investment in terms of time and money. Regardless of which route you take, having access to skilled personnel can help ensure your success. So how do you choose? Well, here are some considerations about which one may work best for your enterprise!

  • Know your team:

If you have a highly skilled or trained in-house IT department, then perhaps that is what you should keep handling your organization’s day-to-day activities. However, if there are specific issues with costs, knowledge of current technologies, limited resources, or if there are different time zones or language barriers within your enterprise that might prevent daily interaction on certain topics at certain times of day, then outsourcing some expertise may be right for you

  • Consider the budget Before Choosing Between Staff Augmentation or Consulting

One of several things people sometimes forget when choosing an IT staffing solution is to consider how much it will cost them per employee hour. Most times, price alone shouldn’t be what drives your decision because ultimately service trumps everything else most times anyway. Just keep in mind whether you are charged by project or per-employee hour, or some other method entirely. Additional benefits of hiring consultants through staffing agencies include economies of scale-like discounts for larger orders—and better pricing overall.

  • Consider the firms:

Now, if you are more tilted towards consulting services then many consultant companies make promises about their level of expertise, their services, or they provide flashy advertising material to reel you in. In that case, an experienced staffing company will tell you upfront what they do well—and also where they are weak. You also get to know about real-world experiences and whether their staff is actually happy working for them, as those who enjoy what they do typically offer better service. With a Staff Augmentation company, not only do they have a team of experts but it’s even possible for that company to use its own employees to work on your projects which give you access to skilled consultants who already have experience in your industry and with similar technologies as yours.

Conclusion: 

In essence, what you need to realize is that IT projects take a lot of time. In addition, when companies choose to work with a one-time project-based consulting firm, they usually end up saving thousands of dollars in comparison to retaining full-time employees or hiring hourly contractors.

On the other hand, staff augmentation provides for flexibility without having to employ permanent personnel – cutting costs while also ensuring that your business stays responsive at all times. If you want IT professionals who can understand your needs instantly without endless rounds of interviews and background checks, then it’s better for your business to sign a contract with a staff augmentation agency instead of going through a tedious process involving multiple interviews for full-time staff members.

Project based consulting vs. staff augmentation Which one is better

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