Ultimate Guide to Staff Augmentation in 2023: It’s Here to Stay
In today’s fast-paced, technology-driven world, companies are constantly seeking ways to stay ahead of the competition and improve their bottom line. One way to achieve this is through staff augmentation, a strategy that involves supplementing a company’s existing workforce with external specialists to fill specific skill gaps, handle temporary workload spikes or simply bring in fresh perspectives. Imagine having access to experts in exactly the areas you need, right when you need them.
In this article, we’ll dive deep into the meaning and benefits of staff and resource augmentation services, and provide a comprehensive guide on how to implement it successfully.
What is Staff Augmentation?
Staff augmentation is the process of hiring external professionals to supplement a company’s existing workforce. This can include adding new team members on a temporary or permanent basis or bringing in specialists to work on specific projects. The goal is to improve a company’s efficiency, productivity, and bottom line by filling skill gaps and addressing temporary workload spikes.
This involves hiring external professionals to work alongside a company’s existing employees, typically to fill temporary or project-specific needs. This type of team extension solution is often used to handle temporary workload spikes or to bring in specialized skills for a specific project. It allows companies to be more flexible and adaptable to changing business conditions.
Why It Is Gaining Popularity
The IT industry is currently the leading industry in the use of alternative labor, which refers to all forms of outsourcing, including freelancing and team augmentation services. According to Deloitte Global Human Capital Trends, 33% of IT companies report using alternative workforce extensively. Other industries, such as operations, marketing, and HR, are also catching up. So, why exactly is IT staff augmentation gaining popularity?
Rapid Technological Changes
One of the main reasons for the growing popularity of tis engagement model is the rapid pace of technological change. The IT industry is constantly evolving, with new technologies, tools, and platforms emerging on a regular basis. This can make it challenging for companies to keep up with the latest skills and technologies. By hiring external IT specialists, companies can ensure that they have the necessary skills and expertise to stay competitive.
According to Business Wire, the global software products market is likely to grow at a compound annual growth rate (CAGR) of 4% and reach $1493.07 billion in 2025 at a CAGR of 11%. This report suggests that as the need for software development expands, IT specialists with highly-specific skills will become even greater. Staff augmentation is the ideal staffing solution to fulfill that ever-growing requirement.
Scarcity of Skilled IT Professional
Another reason for business to look out for the remote talents is the shortage of skilled IT professionals. According to a report by the Bureau of Labor Statistics, the demand for IT professionals is expected to grow by 12% between 2019 and 2029. This is faster than the average for all occupations. However, there is a shortage of qualified IT professionals to meet this demand. By using alternative hiring options, companies can access a global talent pool of skilled engineers and fill critical skill gaps.
Watch our video on how augmenting IT resources can benefit business owners by solving numerous issues 🤩🍿
Flexibility & Adaptability
IT staff augmentation also allows companies to be more flexible and adaptable to changing business conditions. By having a pool of external IT specialists that can be called upon as needed, companies can better respond to changes in the market or changes in their own business needs. This is especially important in today’s fast-paced business environment, where companies need to be able to respond quickly to changes in order to stay competitive.
Cost-Efficiency & Scalability
IT staff augmentation can be a cost-effective solution for companies. It allows them to bring in specialized IT skills on a project basis without having to pay for the overhead costs associated with hiring full-time staff. This can be especially beneficial for small or medium-sized businesses that may not have the resources to hire full-time staff. Furthermore, it allows companies to scale their workforce up or down as needed, depending on business demands.
Read our article, where we compare rates for IT developers based on the hiring model.
Types of Staff Augmentation
There are several models that companies can use to supplement their existing workforce. These models include commodity, skill-based, and highly-skilled staff augmentation.
Commodity-based staff augmentation, also known as project outsourcing services, is a business model in which a company provides temporary workers in order to complete a specific project or task. This model is typically used to source workers without specific specializations, such as data entry or manual testing. When considering commodity staff augmentation, it’s important to carefully consider the skills and experience required, have a plan for integrating the new staff into the existing workforce, and be prepared to manage and monitor the new staff.
Skill-based staff augmentation is a model in which organizations identify the specific skills and knowledge required for a particular project or position, and then hire staff with those skills on a short-term or long-term basis. This model can effectively acquire the skills and knowledge needed without having to invest in training or development for the existing staff. When considering skill-based staff augmentation, it’s important to identify the skills and knowledge needed, find experts who can provide those skills, and integrate the expert into the team.
Highly-skilled remote specialists can be used to address skills shortages or fill business-critical positions quickly. This model involves hiring experts in specific areas to free up existing employees to focus on other tasks. When considering highly-skilled staff augmentation, it’s important to find workers who are truly experts in their field and be clear about the goals and objectives, and deliverables expected from the augmentation. This model is often used to gain a competitive advantage by bringing in top-tier talent.
Another variation of staff augmentation is a blended approach, where a company hires a team of professionals who work alongside the in-house team — this is known as team extension. This hybrid teams approach allows the company to have access to a wider range of skills and expertise while also ensuring smooth communication and integration with the in-house team.
When To Use Staff Augmentation
This approach can be a great solution for businesses looking to fill skill gaps, address temporary workload spikes, and improve their efficiency, productivity, and bottom line. However, it’s important to know when it’s the right time to use it. Here are a few scenarios.
Reinforcing Your Team
When you have in-house software developers, it’s essential to complement or improve your current expertise when releasing new products or launching new projects. In this case, you may want to augment your IT team while still leveraging existing resources internally. Staff augmentation can help to reinforce your team and bring in specialized skills that are needed to complete a specific project or task.
By bringing in external professionals who have specialized skills, businesses can improve the performance of their in-house team and enhance their existing expertise. This can help businesses stay competitive in the market by releasing new products of high quality to meet the needs of their customers. With the addition of new and diverse team members, businesses can benefit from fresh insights and new approaches to problem-solving, which can help them to stay innovative and adapt to the ever-changing market conditions.
Recruiting software development talent can be a time-consuming and challenging task, from the initial job advertisement to the interview process to the final onboarding. The process can take anywhere from a few weeks to several months, depending on the complexity of the role and the availability of suitable candidates. Businesses with tight deadlines may not have the luxury of time to wait for the recruitment process to be completed, which can be a major concern.
Additionally, it allows businesses to choose the duration of the contract, whether it’s a short-term or long-term contract, which makes it a flexible solution. This means that businesses can bring in staff on a temporary basis to complete a specific project or task and then release them once the project is completed.
Needing Specific Skills
IT specialists providers have a ready pool of developers with different skill sets and experiences, which means that businesses can quickly find a suitable candidate for their project needs. This can include specialized engineers or technicians, such as DevOps, data scientists, quality assurance engineers, or business analysts, who can bring new skills and expertise to the team.
Furthermore, this model can also be used to train existing employees over time. This can be particularly beneficial for businesses looking to build their internal capabilities and expand their knowledge base. By bringing in a specialist who has a specific skill set, businesses can ensure that their existing staff are upskilled and can take on new responsibilities in the future.
Staff Augmentation vs. Outsourcing
Staff augmentation and outsourcing are two different strategies that companies use to access specialized skills and expertise. Both strategies involve hiring external professionals to supplement a company’s existing workforce, but there are important differences.
Level of Control
The main difference between the staff augmentation model and outsourcing is the level of control that a company has over external professionals. In the staff augmentation model, the external professionals work alongside a company’s in-house team, typically to fill temporary or project-specific needs. The company has direct control over the external professionals and can manage their work on a day-to-day basis.
On the other hand, outsourcing involves hiring an external company or provider to handle certain functions or tasks for the company. The external provider is responsible for managing the work and the employees, and the company has less direct control over the external professionals. Outsourcing is typically used for long-term, ongoing functions or tasks, such as IT support or customer service.
Another difference between staff augmentation and outsourcing is the level of flexibility. Staff augmentation allows companies to be more flexible and adaptable to changing business conditions, as they can bring in external professionals on a temporary or project basis. Outsourcing, on the other hand, is typically used for long-term, ongoing functions or tasks, which can make it less adaptable to changes in the business environment.
The cost structure is different between staff augmentation and outsourcing. Staff augmentation allows companies to bring in specialized skills on a project basis without having to pay for the overhead costs associated with hiring full-time staff. Outsourcing, on the other hand, typically involves a long-term contract with a provider and can be more expensive in the long run.
Staff augmentation allows for better control over the quality of work and communication with the team members. As the staff augmentation team works alongside the company’s existing staff, it is easier for the company to manage the work and communicate with the team members directly. On the other hand, outsourcing can be less transparent, and it can be harder for the company to manage the work and communicate with the team members.
Staff Augmentation vs. Freelancers
Another strategy that companies often resort to when hiring external professionals is searching for freelancers. However, hiring the right freelancer for a specific task can be incredibly complex, especially because there’s no oversight or agency to control the freelancer and ensure optimal output. Furthermore, since freelancers act as independent agents not affiliated with your projects, there’s a risk of poor output. Below, we highlight some key differences.
Level of Control
The primary difference between staff augmentation and freelancers is the level of control that a company has over external professionals. In staff augmentation, the external professionals work alongside a company’s existing staff, so the company has direct control over them and can manage their work on a day-to-day basis. Meanwhile, freelancers are independent contractors who work on a project-by-project basis and have more autonomy over their work and schedule.
Level of Commitment
Another difference is the level of commitment. IT vendors typically have a team of professionals committed to the company’s project for a certain period of time. On the other hand, freelancers are not committed to a specific project or company and may take on multiple projects at the same time. This can make it difficult for companies to rely on freelancers to meet deadlines and deliver high quality work.
Staff augmentation providers often have a large pool of professionals with different levels of experience and expertise, while freelancers typically have a limited set of skills and experience. According to a report by Upwork, 61% of companies lack the people or skills to complete all their work, and 58% of hiring managers struggle to find relevant talent. With this model, companies can be sure that they are getting the right professional for their specific needs.
Future Workforce Report 2021 by Upwork
Moreover, staff augmentation providers typically have more resources and support to offer than freelancers. This includes everything from finding the right professionals to setting up clear lines of communication and providing ongoing support. Freelancers, on the other hand, often work independently and may not have the same resources and support available, and they can’t be held accountable for meeting deadlines to the same extent.
Staff Augmentation vs. In-House Hiring
In-house hiring is yet another cooperation model that software development companies can use to access specialized skills and staff. In-house hiring is the most traditional form of hiring because it involves onboarding someone as a full-time member of your team, complete with all the benefits and privileges due to employees. While hiring full-time employees certainly provides optimal control, the cost to the company can be hefty.
Level of Control
Both contratc-based and in-house hiring offer optimal levels of control over the professionals. With contract-based outstaffing, the external professionals work alongside a company’s existing staff, so the company has direct control over their day-to-day tasks and output. In-house hiring involves hiring full-time employees to work for the company on a permanent basis, so the company has complete control over them.
Flexibility & Scalability
Staff augmentation allows for more flexibility in terms of scaling up or down the workforce, while in-house hiring involves a long-term commitment to the employee. It also allows companies to bring in specialized skills on a project basis without having to pay for the overhead costs associated with hiring full-time specialists.
Furthermore, hiring IT staff is incredibly expensive. According to the Bureau of Labor Statistics, the median annual wage for software developers was $110,140 in May 2020. Meanwhile, Glassdoor reports that US companies spend over $4,000 to hire a new employee, and the IT sector has an incredibly high turnover rate of 13.2%, which exceeds the average turnover rate in other industries (approximately 10.5% average).
What do these numbers mean? It means hiring IT consultants and software developers is expensive, and retaining them is even more difficult. The overall cost of hiring and maintaining a complete IT staff can be fairly unsustainable for most small- and medium-sized companies. And even bigger companies struggle with flexibility and often resort to outsourcing IT work.
After all, Deloitte’s 2021 report shows that 54% of all IT services are outsourced, compared to only 44% of financial services and 32% of payroll services. With such a high attrition rate, staff augmentation seems like a considerably more flexible, scalable, and cost-effective option than hiring in-house IT specialists who will likely leave within a few months.
Staff augmentation providers typically have a larger pool of professionals with different levels of experience and expertise, while in-house hiring is limited to the available talent pool in the specific location. Furthermore, if a task involves skills and specialties that exceed the hired employee’s capabilities, the company must resort to outsourcing or hiring yet again. Staff augmentation allows companies to find the right professional for their specific needs.
Types of Businesses That Can Benefit From Staff Augmentation Services
Staff augmentation is a flexible and cost-effective solution that can benefit businesses of all sizes and industries. However, certain types of businesses are more likely to benefit from staff augmentation than others. Here are a few examples:
How to Implement a Staff Augmentation Model
Implementing a staff augmentation model can be a complex process, but with the right plan in place, it can be a cost-effective and efficient way to access the talent and skills you need. Here are some key steps to follow when implementing a staff augmentation model.
Step 1: Assess Your Company’s Needs
Before looking for external specialists, it is important to have a clear understanding of what your company requires in terms of skills and expertise. This will help you to identify the specific areas where staff augmentation is needed and to find the right professionals to fill those needs. You can conduct an internal audit of your current workforce to identify any skill gaps or areas where additional support is needed. For example, a healthcare company might need specialized staff augmentation in areas such as regulatory compliance, data security, and clinical research.
Step 2: Develop a Clear Plan
Once you have a clear understanding of your company’s needs, you should develop a plan for the implementation of staff augmentation. This should include details on how many external specialists you need, what their roles will be, and how long they will be needed. Additionally, it’s critical to set clear objectives and goals for the staff augmentation project, including what you expect to achieve and how you will measure success.
Step 3: Choose the Right Engagement Model
There are several types of staff augmentation models, including on-site, off-site, and hybrid models. It’s important to choose the model that best meets your company’s needs. On-site staff augmentation involves hiring external specialists to work on-site at your company’s offices, while off-site staff augmentation involves hiring external specialists to work remotely. You should also consider if you need commodity, skill-based, or highly-skilled staff augmentation.
Step 4: Find the Right IT Vendor
Once you have a clear plan in place, find the right company or IT talent provider to help with implementation. Look for a company that has a proven track record of providing high-quality staff augmentation services and that can match you with the right specialists for your needs. Research different staff augmentation providers, compare their offerings, and check their references and testimonials to ensure they meet your specific requirements.
Step 5: Communicate Effectively
Clear communication is key to the success of any staff augmentation model. It’s important to establish clear lines of communication with external specialists and to provide them with the necessary resources and support to succeed. This can include regular meetings, progress reports, and feedback sessions to ensure everyone is on the same page.
Step 6: Continuously Evaluate and Optimize
Remember, it is an ongoing process, and it’s important to continuously evaluate and optimize your approach. This includes regularly assessing the performance of the external specialists and making adjustments as needed to ensure they are meeting your needs. Additionally, it’s important to evaluate the overall effectiveness of the project and to make changes as necessary to improve outcomes. This can include identifying and addressing communication or integration issues and providing additional training or resources to support external specialists.
Staff augmentation is a cost-effective and efficient way to access the talent and skills needed to achieve business goals. It is a great solution for companies looking to fill skill gaps. However, it requires careful planning and management to ensure success. Other staffing solutions such as outsourcing, hiring freelancers, and in-house hiring also have their advantages, but resource augmentation offers a high degree of flexibility, scalability, efficacy, and cost-efficiency that is unheard of. And as remote work and gig work becomes the norm of today’s world, staff augmentation is primed to be the preferred staffing solution of the future.
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