Staff augmentation and dedicated teams are different products that solve different problems. Choosing the wrong one is a common and expensive mistake: buying staff augmentation when you need a dedicated team means you get engineers who do not coordinate with each other and cannot be managed as a unit. Buying a dedicated team when you need one specialist means paying for overhead you did not need.
Individual engineers who join your team and work under your direction. You manage them directly, they participate in your processes and tools, and they are integrated into your team as if they were employees. The vendor handles HR, compliance, and payroll. You handle everything else.
The model works when: you have a working team and need to increase capacity, the work is well-defined enough that you can manage individual contributors, and you want full control over how the work gets done.
A full team — engineers, a project manager, sometimes a designer and QA — that operates as a unit under the vendor’s management structure. The vendor is responsible for delivery, not just for providing people. You define the outcomes. The vendor manages the how.
The model works when: you are building a product but do not have an engineering team to manage it, you want delivery accountability rather than headcount, or the scope is large enough to require cross-functional coordination that would be expensive to manage yourself.
The most common arrangement for established companies is a hybrid: a dedicated team for new product development, and staff augmentation to increase capacity within existing teams. The dedicated team model is better at starting things. The augmentation model is better at scaling things that already exist.
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