What Is Staff Augmentation? [Complete Guide for Smart Businesses]
The modern IT market is highly dynamic with rapidly changing business objectives and technical requirements.
Thus, trying to have an in-house team meeting all market needs is a rat race; in such a way, businesses risk spending too much energy, time and money on recruitment rather than project completion and launch.
Luckily, the hiring models evolve together with the IT industry, and at present, businesses may take advantage of a new flexible staffing model – staff augmentation.
It combines the benefits of outsourcing and in-house hiring and helps companies to close the skill gap quickly, thus serving the innovative business needs perfectly.
Let’s find out about this model in more detail to see for which businesses it may be suitable and how to go on with extending your team.
What Is Staff Augmentation?
According to Wikipedia, staff augmentation is a type of an outsourcing strategy that involves staffing a project in compliance with the current business objectives.
In simple words, this technique suggests constant monitoring of the in-house developer team’s skillset and identification of skill gaps at each stage of project preparation.
Once the additional needed skills are identified, separate team members are hired for short or long-term cooperation to complete that technical aspect.
These services, in particular, are gaining momentum because of the specifics of IT industry, reduction of coder rates worldwide, and the need for companies to solve staffing tasks quickly and flexibly.
Thus, augmentation in the IT sector involves outsourcing tasks to programmers, designers, testers, system administrators, and other specialists with necessary tech skills and hardware/software for the completion of specific tasks.
In such a way, companies manage to perform most tasks with their permanent in-house teams in collaboration with offshore developers.
This hiring model comes in two types: short-term and long-term collaboration with remote developers.
It is commonly used by companies during hectic periods, high seasons, or if a required in-house specialist is on a vacation or sick leave.
This type is more suitable for longer project.
It is used when there is no specialist with a rare tech stack in the company’s location or specialists with such knowledge charge excessively high rates.
Why do companies need this hiring model?
- Closing the skill gap
Companies that lack IT talents in their area can hire programmers outside of the country. Main outsourcing destinations are usually countries with a huge number of developers which means that finding a rare specialist will be easier there.
- Reduce the recruitment time
Specialists with rare skills and tech stack are hard to find for in-house employment. If recruitment takes months, a company may suffer losses. Thus, staff augmentation helps to hire the needed specialist from any corner of the world in record time.
- Reduce costs of in-house employment
Augmented staff is usually hired in locations where developer rates are times lower than in the company’s home country. Such a difference in average rates helps to reduce development costs.
- Cut operational costs
In-house employees cost a company much more than outsourced staff does. Although vendors charge the fee that includes operational costs, the prices are still lower in the outsourcing countries – office rental, internet bills, equipment, furniture, etc.
- Added flexibility
This model makes it easy to hire developers at the time when the company needs this, not only in peak seasons. For instance, you can easily attract several extra specialists to prepare a project for the Black Friday without significant investments of time and energy.
- Freedom from unnecessary documentation and legal procedures
If you want to to use these services, it’s vendor who takes the legal responsibility for the offshore team. Signing contracts, payroll, accounting – it all goes on the service provider, so these procedures won’t distract your attention from the company’s core processes.
How Does It Work?
The staff augmentation process is quite simple in most companies and involves three core steps (which are nonetheless flexible and depend on each company’s individual conditions):
- Identification of the skill gap
At this stage, the company determines the skill gap that it experiences, and contacts outsourced specialists (or communicates that gap to its trusted vendor) to find and hire the required programmers.
- Onboarding of recruited staff
Once the required specialists are identified and hired by the company, they go through the onboarding process during which they get acquainted with the in-house team, familiarize themselves with core technical concepts, and fuse into the client’s work environment.
- Nurturing of augmented staff
This stage takes as much time as the augmented staff works for the company. It involves continuous learning and development of augmented team members for the sake of remaining valuable assets of the company’s in-house team and delivering exceptional value on their projects.
What Is the Difference Between Staff Augmentation and Managed Services?
As soon as a company realizes that its core staff does not cope with all required tasks, the need to involve outsourced staff arises.
At this point, it’s crucial to make a proper choice of augmentation model; at present, extending team is not the only choice, as the company may opt for managed IT services as well.
Let’s consider extended and managed teams to determine which model is best for which company and what specific resource requirements each of the options is able to satisfy.
Pros and Cons
In simple words, the difference between these two models is in hiring the Project Manager for managing the augmented staff.
If the client hires a team with a PM, then the model is referred to as managed services.
If the PM from the hiring company oversees the team’s work, such a type of collaboration means only staff augmentation.
Its benefits include:
- Cost-effectiveness (no need to pay for full-time staff in case the company requires only short-term solutions);
- Solution to the turnover problem (companies hiring senior-level tech staff often find it hard to provide them with a steady workload, so many employees leave; this doesn’t happen with augmented staff that works only as long as it is needed);
- Flexibility (the company may easily close the skill gap it experiences right now, without the need to hire a new specialist on a permanent basis).
However, the model also conceals some disadvantages such as:
- The model is not suitable for the short-term work because the cost is unreasonable;
- Need of control (once any staff member is hired, the company has to control offshore developers without the vendor’s interference);
- Operational expenses included (not really a drawback since you pay the price that already includes developer salary and cost of the office facilities).
Managed IT services are beneficial in a way that they embrace the benefits of staff augmentation an at the same time offer additional advantages such as:
- PM available (client doesn’t need to manage an offshore team on his own – together with a team, he/she gets a project manager that is responsible for distributing tasks and monitoring performance);
- Outcome-based collaboration (managed IT services can be hour-rate-based);
- Cost effectiveness (once a PM is allocated by the vendor, not by the company, the client saves costs on the recruitment of an in-house PM);
- Improved communication (the client has more reliable point of contact – the team’s PM, which is much more convenient than managing an outsourced team).
Nevertheless, it’s still not an ideal, universal hiring model, as it also involves some drawbacks:
- Lack of control (as soon as the team and the PM work on an outsource basis, most intermediary decisions are made by them, not by the client);
- Reliability issue (it’s important to order managed services from a reputable vendor, since the team with a PM acts as a separate, though connected, part of the company’s staff);
- Integration challenges (external work still needs to be integrated into the internal processes).
Thus, next time when you think of staff augmentation vs managed services, keep these issues in mind and see what fits your business best.
8 Steps to Find a Staff Augmentation Company
Once you are ready to welcome the new staff in your team, we recommend going through the following eight steps for finding a proper vendor for this task.
Among a multitude of companies offering their services in the global market today, quite a few are really reliable and qualified.
So, not to waste time and money, start working with true professionals at once. To do so, you need to:
- Determine the kind of talent you lack;
- Specify which type of services you need – long- or short-term – you require depending on your business tasks;
- Research several outsourcing markets to see which suits you best (we recommend considering both nearshore and offshore outsourcing as favorable options; the most frequent regions of choice are Asia and Eastern Europe);
- Determine the preferred location (based on the comfortable time zone difference, comfortable travel routes, affordable provider rates);
- Find 3-5 staff augmentation companies providing services in that location;
- Verify their testimonials and references;
- Hold negotiations to inquire about pricing, contract details, hidden costs;
- Sign a contract.
Peculiarities of a Staff Augmentation Contract
Both clients and vendors need to take proper care of a well-written, detailed staff augmentation contract as it sets out all terms and conditions of collaboration, pay rates, expected outcomes, etc.
Here are some key points:
- You need to protect your intellectual property, technology that outsourced developers help create, and your company’s trade secrets;
- Augmented staff get access to your unique product data, so it’s essential to sign a non-compete clause to avoid their work on competitors;
- Legal formulation of key duties and responsibilities so that the augmented staff does not breach the contract.
These are the basic points your staff augmentation agreement should include, but you are always free to add any extra points relevant to your unique business situation or needs.
Cost of IT Staff Augmentation
The first thing to keep in mind about the cost is that such services may be provided at a fixed price or at an hourly rate. Let’s clarify the difference.
The rate of augmented staff per hour ranges from $20 to $300 depending on the country and type of required service.
Take into account that staff augmentation companies usually include their overhead cost into the rate.
Thus, the more hours of work you need, the more overhead cost you pay.
Since the company’s fee is often not clearly stated, you may never know how much the developer will really earn by working for you.
Due to this peculiarity, hiring augmented staff on an hourly payment basis suits only for short-term projects, which is cost-efficient.
However, a major con of this hiring model is that you may never estimate the budget for augmented staff precisely; one month, the work may take 180 hours, while another month, it will be 200 hours or so.
This model involves signing a contract in which the cost is fixed.
Some companies are transparent enough to break down the price for the service into the actual developer rate and the company’s commission.
In this way, you always know for sure how much you pay and for what exactly. This allows planning your budget in the long run.
The company’s commission traditionally includes:
- accounting services;
- equipment, furniture, and additional office facilities;
- Internet connection;
- health insurance;
- office parties and social package of the staff.
Some companies also include English language lessons, sports club memberships, training sessions, attendance of conferences, and other brand-related events into the service package.
Now that you know what is staff augmentation, you can consider all pros and cons of this staffing model and make an appropriate decision for your business.
Take into account the specifics of extended teams and managed services, analyze the target market, and find the best solution depending on the length of required assistance, the breadth of tech skills required, and the budget you wish to comply with.
Overall, this model is a highly flexible and convenient hiring model today, but it will serve you well only in case you work with trusted providers and invest some extra time in scribing a proper agreement.