The demand for qualified software engineers and other IT specialists has continued to grow over the past few years. As the world sunk deep into the global pandemic and governments started imposing lockdowns in mid-2022, more and more businesses started shifting their operations online.
This shift led to an increase in the demand for IT specialists to build these online platforms despite the chronic shortage of the said professionals in the last 15 years or so. And that’s where IT staff augmentation services come in.
In this article, we are going to talk about staff augmentation, the different types of augmentation services, when it’s appropriate to augment, and finally, how you can choose the right IT staff augmentation services provider.
What Is Staff Augmentation?
Staff augmentation is a contractual outsourcing service that helps businesses complement their existing in-house teams with external experts or professionals. This hiring solution starts with the client’s company taking internal stock of their existing capabilities, defining the skills deficiencies, and plugging these needs with external hires.
Simply put, IT augmentation services let you quickly source and recruit IT staff for a specific project when your in-house team is facing a skills shortage. By leveraging on the staff augmentation services it becomes easier to expand your in-house team by hiring highly qualified and experienced specialists temporarily. The external experts become a part of your in-house team, although they may not be in your physical office location.
Staff Augmentation Services Company vs In-House Hiring
Staff augmentation and in-house hiring have multiple distinct differences. When it comes to in-house staff, the workers are more attached to the company’s goals and culture. Remote developers, on the other hand, work remotely, making it relatively hard to form a strong bond with your brand.
Another distinct difference between the two hiring models is that, unlike augmented staff, in-house employees tend to have stronger team bonds after working closely for extended periods and through team bonding activities.
Still, on the differences, team augmentation services excel in the speedy turnaround when it comes to hiring employees. These companies have a huge pool of vetted candidates, letting you fill the position almost immediately. This is not the case with in-house hiring, as it may take several weeks to fill a position, even when recruiting internally.
In terms of similarities, you can still engage contractors in team bonding activities via online events or even at office parties for bonding sessions. Still, after working together on several projects, both the in-house and external teams can develop synchrony and bond, making it easier to manage the overall team.
When Is Hiring an Outstaffing Company Appropriate?
If you are a business owner wondering whether or not it’s the right time to take the leap of faith and outsource, there are several indicators to look out for. They include but are not limited to the following;
When you need to scale up. If you are a small business looking to scale up your business operations, resource augmentation services can help you achieve this quickly and efficiently. And since it is a flexible hiring model, it can also be used when you need to scale down your workforce once your project is finished or a high season ends.
Need to hire quickly. Staff augmentation is also a great option for organizations that need to hire quickly. The augmentation services providers vet candidates in advance so you don’t have to go through the entire hiring process to find the right person.
What Is the Cost of IT Staff Augmentation and What Determines the Cost?
The cost of staff augmentation services is inherently dependent on the respective deliverables of a particular project and company. With that said, however, one of the positive aspects of this hiring model is that all the costs of hiring the candidates are lumped into the overall rate charged by the provider. As such, you are billed the total monthly talent cost consisting of each employee’s salary and a service fee. In some instances, the service fee is added to each developer’s salary.
Depending on the company you hire, the cost of augmented services may be provided at an hourly rate or a fixed price. Below is the difference.
Hourly Rate
As the name suggests, the hourly rate is pegged on the number of hours worked. As such, the more the hours, the higher the amount. Needless to say, most staff augmentation companies include their overhead cost into the hourly rate, although you may not know the individual developers’ take-home salary is not usually disclosed.
Due to this oddity, hiring outstaffing services on an hourly payment basis is ideal for short-term development projects, as it is more cost-efficient. The only con of the hourly rate model is that you don’t have certainty in terms of budgets as the timelines may change depending on the project’s magnitude.
In the US, for example, the average augmented staff per hour rate is $27, although it can go as high as $100 depending on the level of experience. In western Europe, the average hourly rate for software engineers is $39, with countries in Eastern Europe like Ukraine coming in at $15. Keep in mind that these rates may vary depending on the level of experience and the scope of the project.
Fixed Price
The fixed price model involves signing a contract at a fixed rate. And just like in the hourly model, some service providers are gracious enough to break down the pricing into the actual developer rate plus the commission.
The company’s commission typically includes:
- Payroll
- Accounting services
- health insurance
- Furniture and office equipment cost
- Internet connection
- Staff’s social package
If you are in the US and decide to use an IT augmented services provider, the average annual salary of a software developer is $94,064 per year or $7000 per month. In a country like Ukraine, the average monthly rate is $3,000.
Benefits of Staff Augmentation
As an entrepreneur, there are many benefits that come with leveraging staff augmentation to managed services. Here are just a few of those reasons:
Helps Cut Costs
One of the biggest and probably the most important benefits of staff augmentation is its cost-saving benefit. According to a report published by GlassDoor, the average cost of hiring an employee in the US stands at $4,000 and takes about 52 days to fill the position. By partnering with an IT outstaffing services provider, companies can reduce the cost of hiring staff by up to 30%. Better yet, these recruitment agencies vet the candidates in advance, and if they fail to pass the probation period you get a free replacement without additional cost.
Helps Acquire Niche Expertise and Tribal Knowledge Rapidly
Another benefit of team extension services is that they allow companies to close the gap in skills that aren’t available internally. Whilst it’s possible to recruit tech experts on their own, it is relatively costly and time-consuming, plus a company may not require these specialists permanently. Along with that, sourcing and selecting employees is a lengthy process. Most service providers keep a large pool of pre-vetted candidates, allowing you to hire in record time.
Better Control
As a business using outsourcing project development, it is extremely challenging to keep track of the entire development process and manage the outsourcing team. The staff augmentation model, on the other hand, lets you monitor the development process in real-time and effectively manage the employees.
Increased Scalability and Flexibility
With staff augmentation, you can scale your workforce either upwards or downwards depending on your hiring needs. You can hire as little as a single person to handle a particular aspect of a project or an entire team to deliver a project from zero to completion. This is particularly important for a business, as it allows them to undertake tasks of varying magnitudes or complexity, without sacrificing the timelines.
Minimum Legal Requirements
Traditional hiring comes with a string of legal responsibilities including payroll, taxes, and health insurance. Under the staff augmentation hiring model, however, the staffing vendor shoulders the burden of being the developer’s official employer, meaning they take charge of all the legal responsibilities and paperwork.
Risks to Consider When Hiring Staff Augmentation and Managed Services Provider
Just like any other hiring model, staff augmentation consulting services do have several risks associated with them. As an entrepreneur, it is important to assess these risks before hiring an augmented staff to avoid encountering headwinds along the way.
Before putting pen to paper, the first thing to consider is the cultural fit between the service provider and your company. Culture is a critical ingredient when considering outsourcing as it greatly impacts the performance of employees. If you discover a slight mismatch between the two parties, you are better off looking for another agency.
Steps to Finding a Reliable Staff Augmentation Company
Once you have established that staff augmentation is something worth exploring, it is time to start looking for a reliable staff augmentation company. Unfortunately, the huge number of companies offering their services today makes it almost impossible to find a reliable and qualified partner.
To make it easier for you, we have curated a list of 8 steps to finding a reliable staff augmentation company;
- Start by auditing your in-house talent to establish deficiencies.
- Next, specify the type of services needed– long- or short-term – depending on the project at hand.
- Research the different outsourcing markets to see the one that suits you best. Here, you can choose between nearshoring and offshoring, with the most popular destinations being Eastern Europe, Asia, and India. While at it, consider the time zone difference, and choose the one that aligns with your local time or is more convenient.
- Find between at least 5 staff augmentation companies within your preferred location, and verify their testimonials, references, and technical recruiters.
- Negotiate the pricing and contract details if necessary.
- Sign a contract and start onboarding.
What Is Included in the Staff Augmentation Service Package?
Every development project requires a varied talent base to complete. Luckily, staff augmentation companies retain a large pool of experts capable of building a project from the ground to completion. Some of the experts include:
- Project Managers. These professionals carry extensive certification and industry knowledge, and they can help manage and implement a myriad of IT-related projects.
- Architects. How well does your IT environment serve your company? System architects work closely with your leadership and IT team to establish the optimal configuration to supplement your project goals.
- Business/Systems Analysts. These professionals add value to your operations by identifying the project’s requirements and recommending the appropriate solutions, allowing you to stay ahead of the curve.
- Software Developers. Software developers help in web and mobile application development, as well as integration and strategy support.
- Infrastructure Specialists. These professionals help manage and support your IT infrastructure, as well as ensure they operate efficiently.
Final Thoughts
Staff augmentation is an excellent option if you are looking to scale your team quickly and plug a skills gap in your organization. It brings multiple advantages like cost saving, flexibility, and transparency, which are critical ingredients for success for both small and big businesses. With that said, however, you need to conduct extensive research and thoroughly vet the outsourcing partner to ensure the success of your project.