IT Staff Augmentation vs. Outsourcing Cost Comparison Calculator
Compare the true total cost of bringing in augmented IT staff versus outsourcing your IT project or function to a managed service provider.
Staff Augmentation Inputs
Outsourcing Inputs
Formulas Used
Staff Augmentation Total Cost:
- Labor Cost = Num Resources × Hourly Bill Rate × Hours/Week × Duration (weeks)
- Management Overhead = Labor Cost × (Management Overhead % ÷ 100)
- Total Augmentation Cost = Labor Cost + Onboarding Cost + Management Overhead + Tooling Cost
- Effective All-In Hourly Rate = Total Augmentation Cost ÷ Total Hours
Outsourcing Total Cost:
- Vendor Management Cost = Fixed Contract Fee × (Vendor Mgmt % ÷ 100)
- Pre-Risk Total = Fixed Fee + Variable Costs + Transition Cost + Vendor Management Cost
- Risk Contingency = Pre-Risk Total × (Risk % ÷ 100)
- Total Outsourcing Cost = Pre-Risk Total + Risk Contingency
Savings = Total Outsourcing Cost − Total Augmentation Cost (positive = augmentation is cheaper)
Savings % = (Savings ÷ Total Outsourcing Cost) × 100
Assumptions & References
- Bill rates are fully loaded agency rates; internal salary + benefits are not separately modeled for augmented staff.
- Management overhead (5–15%) reflects internal PM, HR coordination, and supervision time per industry benchmarks (Deloitte Global Outsourcing Survey 2022).
- Outsourcing contracts typically carry 5–15% vendor management overhead and 5–10% risk contingency (Gartner IT Outsourcing Research).
- Transition and knowledge transfer costs are one-time and often underestimated; industry average is 6–12% of first-year contract value (ISG Outsourcing Index).
- Variable/overage costs in outsourcing contracts average 4–8% of the fixed fee (KPMG Sourcing Advisory).
- This calculator does not account for quality differentials, IP risk, time-zone productivity loss, or cultural alignment factors.
- All costs are in USD for a single engagement period; multi-year TCO requires annualizing and discounting future cash flows.