In recent years, many information technology (IT) departments have sought to increase their agility, overcome short-term capability deficiencies, and/or accommodate the impact of hiring restrictions by utilizing staff augmentation arrangements with IT service providers or by contracting directly with independent contractors. As a temporary strategy, this approach has a number of advantages compared to the alternative of directly hiring staff.

Under a staff augmentation model, the cost of hiring for temporary requirements and disengaging once those requirements have been met can more than offset the higher cost of engaging more permanent resources. Moreover, staff augmentation requires minimal contracting effort, has a simple cost model (rate times hours worked), can scale up or down quickly and has minimal impact on the existing operating model of an IT organization.

Staff augmentation, however, can become problematic when it morphs into a permanent operating model. As a long-term solution, it has none of the benefits of alternative long-term external sourcing models, such as managed services (outsourcing) and, in fact, can create a number of serious risks and potentially destroy value