Home Startup What’s the Difference Between Staff Augmentation and Outsourcing?

What’s the Difference Between Staff Augmentation and Outsourcing?

by Beth George

Staff augmentation and outsourcing are both great options for companies that need more work or more specialized work than they employ currently either because of oversite, a limited employee pool, or changing company needs.

That doesn’t mean that staff augmentation and outsourcing are the same. It’s easy to confuse the two but confusing them at a board meeting can make a mess of things because they do refer to different processes that solve different problems.

Here we’ll define both staff augmentation and outsourcing. Then, we’ll talk about some of the key differences between Staff Augmentation and Outsourcing. We’ll also talk about some of the similarities as well as when businesses need to use staff augmentation and when they need outsourcing. That way, you won’t just know one from the other, you’ll know which one is right for your company.

What is Outsourcing?

a keyboard with outsourcing buttonOutsourcing refers to paying people who don’t work for you to do work for you. When most people talk about “outsourcing” they’re talking about hiring a company from outside of the country, but that’s not necessarily the case. If you pay a freelancer that you regularly see in person, but that isn’t on your regular payroll, you’re still outsourcing.

Your company may outsource work because it is difficult to find the talent that you need in your area. You may be outsourcing for tax purposes, for financial reasons, or because it makes for a more agile corporate structure.

In that first paragraph of the section, we’ve already talked about the two major kinds of outsourcing: working with a firm and working with a freelancer.

Some outsourcing companies have whole teams that they can assign to individual clients and usually charge on a per-project basis. Depending on the company, they may have a minimum size project that they are willing to work with, or a minimum price range.

The other method is working with freelancers. Freelancers are individuals who work with a series of clients instead of working full time with any one company. You may be able to locate freelancers in several ways but one of the most common is through “talent agencies.” Talent agencies are platforms that connect companies with freelancers.

Some companies are somewhere in between in that they take on clients and projects but have no staff, instead of working with freelancers. These companies, then, are little more than middlemen but that doesn’t mean that they’re useless. They can be good for companies that need work done but don’t know how to effectively source the work themselves as software development outsourcing has certain key risk areas.

What is Staff Augmentation?

2 staffs discussing Staff Augmentation is a process in which companies take account of what positions they have and which positions they need to be filled. Because companies engaging in staff augmentation look for required skills or positions rather than required projects, staff augmentation can result in a conventional hire, an internal promotion, or in outsourcing for the talent that you need.

Usually, when you outsource to fill a position discovered via the staff augmentation process, you use a freelancer rather than a firm.

What is the Difference Between Staff Augmentation and Outsourcing?

In describing staff augmentation and outsourcing, we’ve already briefly laid out some of its key differences.

First, outsourcing is a way to solve a problem while staff augmentation is a way of identifying a problem.

Second, outsourcing is usually a way of obtaining a product, while staff augmentation is a way of filling a position.

How are Staff Augmentation and Outsourcing Similar?

Staff augmentation and Outsourcing are very different but if they didn’t have a few similarities, they wouldn’t be so easily confused.

Staff augmentation and outsourcing are similar in that they are ways to fill needs in your business and expand your team, whether temporarily or otherwise.

Another Layer of Confusion

In recent years, another layer of confusion has come up in terms of staff augmentation.

As more and more people work remotely, several companies have come up with platforms that allow teleconferences via virtual and augmented reality. Many of these platforms allow users to share models, view presentations together, and even choose or create avatars to represent them in meetings.

This technology helps to build camaraderie with remote workers, decrease training time, reduce miscommunications, and more. This technology is sometimes erroneously referred to as staff augmentation, increasing the unfortunate confusion around these problems.

Staff Augmentation Vs. Outsourcing: Which One Is Right for You?

confused person

With all of these terms, you might be wondering which solution your business really needs. That all depends.

Staff augmentation is a virtually constant process in early-phase startup companies. Deciding which specialist roles you have and which ones you need to be filled can go on for what can feel like ages.

That doesn’t mean that staff augmentation necessarily ends once a company becomes established – or that it ever ends at all. Staff augmentation can come up when companies expand into new markets, when they upgrade their technology, when they open new branches or locations, create new products and services, etc.

Outsourcing is commonly done by companies of all shapes and sizes. It can be faster, easier, and cheaper than looking for employees in the conventional sense, particularly if you are willing to work with people remotely.

However, outsourcing is even more valuable for companies that exist in areas that aren’t technology centers. Companies in more rural areas often have problems finding technology experts to fill their positions and wouldn’t be able to have a tech-heavy company without outsourcing.

As mentioned above, staff augmentation and outsourcing aren’t mutually exclusive and often go together. You may try to avoid outsourcing until staff augmentation convinces you that you desperately need to fill a position.


Staff augmentation and outsourcing are both important processes in the business world. Chances are, you’ll encounter both of them in your career. The two processes are just similar enough that mixing them up could lead to major confusion in the workplace.

Knowing one from another can help you to know which one your company needs and when to use each to solve the problems that every startup encounters at one time or another.

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