During the first half of 2020, the COVID-19 pandemic caused small businesses to lose 8 million jobs, while larger companies lost 7.8 million.
However, later in 2020, large businesses gained 3 million jobs, while small businesses added 2.9 million.
Small and medium-sized businesses (SMBs) can now find cost-effective, flexible ways to scale their workforce and speed it up.
But where? Through staff augmentation and traditional outsourcing.
While both approaches connect businesses with external talent, they address different needs. There is no clear best choice between the two—everything depends on your goals, budget, and the specific skills your business or project requires.
The key for SMBs with limited budgets is finding solutions that offer agility and efficiency without overwhelming costs.
To help you decide on your business, we wrote a “staff augmentation vs. traditional outsourcing” guide to explore the pros, cons, and cost implications of both options.
Let’s begin.
What Is Staff Augmentation?
Staff augmentation is a hiring model where businesses hire external professionals to work alongside their in-house team on specific projects or roles. You can hire them quickly to help with a quick project.
This hiring model often involves freelancers or virtual assistants from different countries with different time zones.
Generally, staff augmentation means collaborating with people with specialized skills or who are experts at specific jobs, including (but not limited to):
- Accountants
- Bookkeepers
- Digital Marketing Experts
- Engineers
How Staff Augmentation Works
- Companies collaborate with providers offering remote staff augmentation or offshore talent solutions.
- These external professionals integrate into your existing team, working under your management and following your processes.
- You can easily hire or fire workers as needed, so you always have the correct number of people.
Pros of Staff Augmentation
Here are the pros and cons of staff augmentation:
Access to Specialized Talent
If your project requires niche expertise, staff augmentation helps you find the right professionals.
Flexibility
You can easily change the number of people on your team to match the work you need to do.
Control
Augmented staff work directly under your management, ensuring alignment with your goals.
Cost-Efficiency
You can access top-tier professionals at competitive rates by hiring offshore talent solutions.
Availability of Virtual Assistants
Handle routine tasks remotely without hiring full-time staff.
Cons of Staff Augmentation
Management Dependency
Your team must manage the additional augmented staff, which might strain time and resources.
Temporary Nature
This model may not suit businesses looking for long-term solutions.
Potential Integration Challenges
Bringing in new team members mid-project can require time and effort for onboarding.
What Is Traditional Outsourcing?
Traditional outsourcing means hiring another company to do some of your work. This company will manage its team to finish the job.
A study found that 37% of small businesses outsourced at least one business function, while Statista reported the global outsourcing market had a value of $92.5 billion.
How It Works
- Companies hire other companies to answer customer questions, sell insurance and similar services, or advertise their products.
- The provider has full responsibility for managing their team, resources, and output.
Pros of Traditional Outsourcing
Here are the pros and cons of traditional outsourcing:
Focus on Core Operations
Outsourcing lets you offload non-core activities, giving your internal team more time to focus on strategic goals.
Lower Overhead Costs
Business process outsourcing (BPO) providers handle their people, tools, and systems, allowing you to save money.
Expertise at Scale
BPO providers have the experience and tech infrastructure to handle large-scale operations efficiently.
Cons of Traditional Outsourcing
Limited Control
You rely on the provider’s processes, which may not always align with your standards.
Communication Barriers
Different time zones and languages can make working with people from other countries hard, especially when hiring them to work remotely.
Standardized Processes
Outsourced teams often follow standardized processes, which might not fit unique project requirements.
Staff Augmentation vs. Traditional Outsourcing: Key Differences
Here are several critical differences between staff augmentation and traditional outsourcing:
| Feature | Staff Augmentation | Traditional Outsourcing |
| Control | High control over tasks and team management | Limited control—The provider manages the teams |
| Skills Needed | Specialized, project-specific | Generalized or large-scale tasks |
| Cost | Can be flexible (according to your needs) | Fixed contracts, often lower per task |
| Scalability | Easy to adjust team size as needed | Suited for long-term scalability |
| Integration | Works alongside your existing team | Operates independently |
Cost Comparison
The costs of both models depend on the scope of the work, the talent’s location, and the duration of the engagement.
| Feature | Staff Augmentation | Traditional Outsourcing |
| Cost Drivers | Hourly rates, specialized skill premiums, and location (e.g., offshore talent solutions) | Fixed contract rates, provider overhead, and scale of services |
| Savings Potential | There is no need for long-term benefits or infrastructure investments. | Lower operational and management costs, especially for repetitive tasks. |
Staff Augmentation vs. Traditional Outsourcing: Which Model Is Right for You?
The best choice between adding more workers to your team or hiring another company to do the work depends on what your business needs.
Staff Augmentation Is Best for:
- Short-term Projects
- Control-Driven Tasks
- Dynamic Scaling
Traditional Outsourcing Is Best for:
- Non-Core Activities
- Cost-Conscious Businesses
- Autonomy in Execution
Ideal Roles and Skills for Each Model
Both outsourcing models excel in distinct areas depending on their architecture and capabilities.
Knowing which jobs and skills work best with each hiring method is essential for getting the most out of people in different businesses.
Staff Augmentation:
- Software Developers
- Virtual Assistants
- Digital Marketing Specialists
- UX/UI Designers
- Engineers with niche expertise
Traditional Outsourcing:
- Customer Support Representatives
- Data Entry Specialists
- IT Infrastructure Management
Staff Augmentation vs. Traditional Outsourcing: Making the Right Choice for Your Business
Consider the following factors before deciding:
1. Consider immediate and long-term costs.
2. Identify whether you need specialized skills or broad operational support.
3. Assess your current staffing needs and whether you’ll need to hire more or fewer people in the future.
4. Align your business model choice with your company’s growth strategy and operational priorities.
Remote staff augmentation gives businesses access to talented people worldwide, and they can easily change the number of workers as needed.
Hiring another company to do some of your work can make your business run more smoothly and efficiently.
ClearSource: Your Staff Augmentation Partner
At ClearSource, we’re all about helping you grow your team with top-notch remote and offshore talent. We’ll work with you to find the perfect fit for your business needs.
Check out our services to see how we can strengthen your workforce while saving you money.
We’re here to help you achieve your goals and streamline your operations.
Contact one of our experts today to discuss the solutions we can offer you.
