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What Is Staff Augmentation? Is it Better Than Other Team Extension Models?

CEO Alcor
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Professional areas include business structuring of tech companies in Ukraine, business & team management, leadership practices.
18 March 2021
9 min

If you’re looking for ways to extend your company, staff augmentation might help you to deal with it. This business practice not only helps with bridging different skill gaps but also saves you money and energy.

 

I’ve been managing operational processes for IT companies for 15 years and seen the many challenges that tech companies face throughout their development. The team expanding process is the hardest one to address. Thus, I’ve decided to write this article to hack staff augmentation for everyone looking to adopt it in the future.

 

What is Staff Augmentation?

 

Staff augmentation is a business strategy used to supplement the existing team with qualified professionals in the most efficient and time-saving way. Some people also call it “resource augmentation” or “business augmentation”. To put it simply, this is when you need to find a few more hands on deck for your project, plus save time and costs on employee hiring, onboarding, and maintenance.

 

Some people consider staff augmentation an umbrella term for outsourcing and R&D office establishment, while others believe it’s another name for outstaffing. So long as they argue about what is staff augmentation, I believe that it’s a related term to outstaffing when it comes to IT.

 

An example of staff augmentation is the healthcare project in telemedicine by the University of Pittsburgh Medical Center. With the help of staffing services, the university managed to grow its team and go from “zero to 100 in telemedicine overnight”.

 

staff-augmentation-services

 

IT Staff Augmentation and Why It’s so in Demand

 

IT executives resort to staff augmentation for IT when they realize that their onsite team no longer satisfies all the needs of their enterprise. It happens if a company grows, launches bigger projects, and has to deal with several important tasks at once.

 

In this case, in-house developers might sometimes fail to meet all the deadlines and need external help in the shortest time. That’s when outsourcers usually come in handy. But, if you need to get full control over the task completing, staff augmentation companies are more helpful.

 

Besides, according to the study conducted by the American Staffing Association, 8 out of 10 job candidates expect to change their workplace within 1 year because of the unstable market situation. This may negatively impact the employee turnover rate in all companies, hence the risk of losing in-house workers.

 

However, the leaders of IT firms no longer fear employee turnover. Despite the global Covid-19 crisis, the tech sector not only survived the 2020 challenges but managed to thrive.  This can be explained by the possibility of remote work, videoconferencing, and vibrant online communication that have enabled IT companies to quickly complement any skill gaps that may arise.

 

No wonder why IT staff augmentation has become an important stage in expanding of tech companies. This business process lets them find even the most sought-after engineering skills such as blockchain, cloud computing, artificial intelligence, and scientific computing.

 

 

Types of Staff Augmentation Providers

 

To satisfy the needs of different clients, staff augmentation has transformed into a huge industry with various providers. The most common of them are:

Traditional staffing providers

This is an agency that is also called a “commercial/generalist staffing provider”. Its primary function is to augment your team with the needed expertise in non-critical projects but not the employees with specific skill sets. For example, if you’re a CEO of an IT product company, you may use the services of such staffing vendors to find a good data entry specialist.

Boutique staffing firms

Boutique staffing usually refers to small staffing agencies that can fill even the hardest roles in your company such as a senior architect. Such a vendor provides highly customized services and values quality over quantity. That is why you need to pay a fortune for their assistance sometimes.

Staffing platforms

These platforms that are also called “human clouds” provide staff augmentation services and connect potential employees and employers. They are divided into gig and on-demand platforms. The only difference between them is that gig platforms do not guarantee that you will receive professional employees, while on-demand platforms try to provide only curated, interviewed, and vetted talents.

Recruitment agencies

Recruitment agencies are staffing providers that hire employees for both critical and non-critical projects of the client. They receive a compensation fee if they find a suitable candidate for a job. However, recruitment firms may fail to find you a perfect candidate. It happens because they usually do not have special expertise in a certain niche (such as IT) and opt for the unfitting candidates.

 

There is another solution to recruit the best talents to your company: through setting up your own R&D office in offshore countries like Ukraine. This way you will receive your own development hub backed up by all the operational services. This is what Tonic Health, a US-based product software company that provides a medical data collection platform, did with the help of Alcor!

 

 

Pros and Cons of Staff Augmentation Services

 

Before you get your feet wet with staff augmentation, you need to get the full picture of such an outstaffing model. Thus, I’ve come up with all the pros and cons of this team extension business practice. Let’s start with the advantages.

Expertise

With staff augmentation, you receive access to all the skill sets that your company lacks. If you need a QA engineer to test your new software but don’t want to hire this person full-time, the staff augmentation model has got you covered.

Quick personnel scaling

Staff augmentation firms can help you find the right talents fast and cut the time that you would have spent on hiring and management of these very talents yourself. For example, if you need to find a couple of middle engineers for a project, you can quickly bridge this gap without the hustle and bustle.

Flexibility

Given the popularity of staffing providers, they never have difficulty with finding the specialist your team is missing. So, if you identify talent insufficiencies among your existing workers, the staff augmentation model will help you replace them. Once you’ve done that and benefitted from the services of your augmented employees, you may easily fire them.

Cost savings

When you hire full-time in-house employees, you need to spend a lot of money on their training, procurements, and maintenance. With staff augmentation, you don’t have to do this. Your outstaffed personnel works from home or a provider’s office, so you save your resources substantially.

 

Even though staff augmentation may seem a nice solution to quickly address and fill the skill gaps in your company, it has some downsides you need to be aware of, for example:

Lack of dedication

Your temporary employees know that your project will soon be done, just like their commitment to it. That is why they don’t care much about the well-being of your company in the future. For this reason, permanent workers (both in-house and remote) are better.

Additional long-term costs

Staff augmentation is great if we’re talking about a short-term perspective. But, if you like the results of augmented employees and want to retain them, it will cost you more. This is because you either pay a service fee to the staffing provider, a commission to the staffing platform, or a buy-out fee for an augmented worker. Thus, full-time on-premises workers are cheaper than staff-augmented ones in the long run.

Onboarding time

Staff augmenting is quick in terms of team-scaling, and you don’t worry about recruiting and management. However, you still need to allocate some time to onboard your new team player to help them deal with the tasks more efficiently.

 

 

Staff Augmentation for IT: the Interim Stage of Business Expanding?

 

IT staff augmentation services are beneficial because the tech companies may now hire the top talents not only in their home country but abroad – remote work has made this a reality. Besides, finding developers online is stress-free and saves tons of costs, so IT business leaders resort to this service often.

 

Note that IT staff augmentation solutions work best as a transition stage of team upgrading. This process starts from hiring a couple of freelancers, making sure it’s safe, cost-saving, and convenient to work with them, and then stepping freelancing up with outsourcing.

 

At this point, business executives delegate the whole software development projects to outsourcing agencies. When the necessary task is accomplished, IT companies want to have results like this all the time and opt for outstaffing. They receive the right talent who works for them on a project-by-project basis but find it expensive to pay the service fee to the provider.

 

This is when top managers go all-in for their offshore R&D office development. To do that properly, they choose the right location by comparing the top places for remote work. Then, it’s time for them to choose countries like Ukraine because of the large talent pool (200,000 IT professionals) and low payroll taxes (5%). After that, business leaders compare the top providers in this location and stick with those who assist them on every stage of offshoring.

 

outsourcing-pyramid

 

Staff Augmentation vs. Managed Services

 

Managed services are also called consulting assistance in specific business tasks. Managed services providers work side-by-side with a client but don’t overtake the full control over the project. They help you manage your tasks more strategically while keeping long-term results in mind.

 

In contrast to managed services, staff augmentation leaves you completely in charge of all the operations. You are still the manager of your team’s success and have to oversee your new employees’ performance yourself.

 

Staff Augmentation vs. Software Outsourcing

 

Software outsourcing is a related term to managed services but these are not the same concepts. When you outsource business processes, you delegate the control over a project to third-party vendors. In this way, you get rid of management once and for all.

 

Compared to the outsourcing model, staff augmentation lets you address the hiring challenges if you feel the candidate is unsuitable and monitor the progress of your new team.

 

Staff augmentation vs. Dedicated teams

 

If you are interested in setting up a dedicated team, you’ll receive loyal employees that will supplement your existing team and be focused solely on your project. This way you invest your resources in long-term success and build a relationship with the people who work for you.

 

Staff augmentation offers you something similar, right? But, the difference lies in management. While dedicated teams are usually supervised by a vendor, the augmented staff recognizes you as their main manager.

 

Staff Augmentation vs. R&D Center

 

Some people confuse the terms “dedicated team” and “R&D center” and think it’s the same thing. However, setting up an R&D center presupposes receiving business process outsourcing services upon request.

 

What does it mean? First off, you choose a reliable vendor who recruits a full-fledged team and creates a representative offshoring center if you need. This is one of the best practices of team augmentation since such BPO services as legal support, payroll, accounting, real estate, procurements, and others will be taken care of as well.

 

Staff augmentation cannot boast of something like that. Here, you receive a worker or a team of workers and then lose them after the contract ends. With a software R&D center, your team abroad not only develops and supports your product but cares about its future. If you opt for a reliable BPO provider like Alcor, you’ll get a team like this 100% guaranteed!

 Final Thoughts

 

To implement staff augmentation or not is up to you. Given the benefits that this team extension model offers, such as expertise, quick team scaling, flexibility, and cost savings, this might be a good choice. But, before you making any hasty decisions, don’t forget about the downsides of this business practice such as decreased dedication, onboarding time, and additional long-term costs.

 

If you feel that staff augmentation is not enough, you may consider managed services, outsourcing, dedicated teams, or an R&D center establishment. Smart executives choose a business expanding solution that will help them achieve their staffing goals in the shortest time, save substantial costs, and build loyalty with their new team. So far, only an offshore R&D office setup has managed to reach all of these goals.

 

An example of this is the R&D office of People.ai, a software product company that provides optimizing B2B sales solutions through the AI-powered platform. Alcor launched their new offshore development hub in Ukraine in only 4 weeks, and eventually recruited over 25 employees for People.ai.

 

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We will provide you with statistical data regarding the number of developers in Ukraine and their average salaries. The discussion will proceed with the expected hiring deadlines and our recommendations on managing payroll, equipment procurement, and compliance matters.

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