Outsourcing is an excellent practice for meeting business objectives with minimal resources involved to support strategic goals. Companies that favor professional services for a reasonable price have embraced this delivery model quite quickly. Outsourcing companies increase the scalability of services they provide based on the demands of the current market. It also includes such software development outsourcing types as staff augmentation and dedicated development teams.
Traditional outsourcing and staff augmentation have a significant influence on the global economy: in 2022, the outsourcing market totaled $400 billion worldwide, not only because it’s considered cost-effective to outsource, but also because companies often choose to outsource to focus on their core business activities. This allows for flexibility, enabling speed to market, and enhancing service quality for a new project.
Source: Global outsourcing survey 2022, Deloitte
Remote teams prove to be a successful solution to the IT industry, which requires skilled programmers with high competencies to deliver high-quality jobs for beneficial pricing. Because recruiting in-house specialists is a challenging, time-consuming task, and freelancers often happen to be unreliable, staff augmentation offers the benefits at a fraction of the cost. However, it depends on choosing a time & material or fixed-price business model.
There are reasons why people choose staff augmentation over in-house hiring:
- In-house hiring is expensive
- High staff turnover
- Time spent on recruitment, especially with the overheated IT market
- Lack of a local talent pool
- Budget limitations
What is the Staff Augmentation Model?
The augmented staffing model implies expanding an in-house team with specialized skills experts on a short-term or long-term project basis. It means that you can cover a team’s skill gap by contracting dedicated specialists that will match specific IT project needs, add a competitive advantage to your business, and eliminate the liabilities of employing in-house employees.
For example, if you are developing an e-commerce website, and you already have a team of developers in-house, but to launch everything in time, you lack two more programmers with specialized skills. Not to lose months on recruitment, contracting issues, and selecting a person to fit your team, you can use a staff augmentation service and hire a software developer in 2–3 weeks. Then, when the project is launched, you are not facing legal complications for firing a team if you don’t need their services anymore.
Specialized staff augmentation firms are just the place to find such dedicated IT professionals ready to join your project in a matter of days. This staff is employed and managed by the agency. It also means a much faster onboarding process without any need to go with payroll management, administration of the office space, vacations, training, and all other admin and legal issues. However, you still need to onboard a new tech talent into your in-house team. The difference with a dedicated development team is that, in this case, you may not onboard new team members with full-time employees.
Staff Augmentation is a process of expanding an in-house team with dedicated specialists on a short-term or long-term contract basis without the liabilities of contracting employees.
Outsourcing agencies keep a database of profiles with a specific skill set. Therefore, you can choose to expand your company with vetted software developers. Thanks to their talent pool of professionals, scaling your teams becomes quick and easy. That is especially beneficial for organizations that continuously need to hire developers with different skills and competence levels on a project basis.
You may choose the staff augmentation model if:
- Your in-house team is overloaded with work, and you don’t have the talent to invest in a new project.
- Staff turnover is rising in your company, or you may find a temporary substitute for an employee who must leave for a while due to maternity leave, illness, etc.
- You require the specialized expertise you don’t have in your stack to deliver the project, and you don’t need that professional after project implementation.
- You have CTO/PM in your team, or you are tech-savvy yourself. As the management of contractor employees is on the client’s side, it’s crucial to have someone control the delivery.
- You need to expand the team rapidly. You may spend months looking for a senior developer or someone with rare/highly-sought after expertise due to market competition. It’s better to partner with a company that can offer a wide talent pool of professionals.
The Benefits of IT Staff Augmentation Services
More companies turn to staff augmentation to fit time and budget constraints. If you already have a dev team in place with the project manager or responsible tech, hiring contractors would be better than hiring a dedicated software development team that includes managed services from vendors.
Being adaptable to business conditions but secured by a talent-sourcing vendor, staff augmentation becomes the right solution if you have a large upcoming project. An unexpected workload isn’t something you should be bothered with since this team extension model allows you to add people with the necessary skill set at any moment. This way, companies can take on projects of any size and complexity. Furthermore, relying on staff augmentation will help you cover vacant positions in a matter of days.
Less time recruiting
Recruitment is a challenging task with an often unpredictable outcome. What if you’ve spent six months trying to fill the position, and the new employee quits in a few months? Should you consider relocating candidates if there’s no one in your area meeting the demands? What if you only have two weeks to recruit a specialist?
Headhunting takes too much time and effort. Suppose that’s something you can’t afford. In that case, staff augmentation is beneficial, primarily if you work with vendors that maintain an extensive database of vetted specialists to match them to your needs quickly.
On-demand outstaffing saves on arranging a new workspace and providing equipment, hardware, software, and other office supplies. Additionally, you don’t have to bother with covering vacations, sick leave, health insurance, and paying employee taxes—all of this is the staffing vendors’ responsibility. Keep in mind if you want to hire high-quality talent, the salary rates of developers may still be high. Therefore, if you find a candidate who fits your criteria, it’s better to hire them on the spot instead of looking somewhere else for better rates. As the demand for professionals is high, you may lose the current candidate for someone else. However, it is still more cost-effective than in-house hiring. Below we provide the overview of cost expenses if you hire in-house freelancers through the platforms or opt for staff augmentation with YouTeam.
|In-house hiring in the US||Staff augmentation via YouTeam||The freelance contractor on Upwork|
|Extra costs for the company||Taxes, bonuses, non-financial benefits, office rent, and support||YouTeam commission||Upwork commission|
|Hiring costs||HR costs, job promotional ads||YouTeam does candidates’ sourcing and assists with interviews for free||Managers’ time for candidate sourcing, screening, and interviewing|
Efficient staff management
Compared to project outsourcing, staff augmentation provides more control over the workflow and the team. When you handle the management operations yourself, it gives you more authority than leaving team management to the outsourcing provider. In addition, by monitoring the development process and team efforts, you can take action immediately. So, you won’t be caught up in a situation when the outsourced manager tells you about a problem that could have been solved three months ago.
Focus on people, not vendors
When searching for an IT outsourcing vendor, business owners pay attention to their experience and expertise. However, sadly, these factors can’t guarantee the high quality of work their outsourced resources will provide. In that case, the right strategy would be to target the skills you need for the project before choosing the vendor. In addition, you can check some vendors on Clutch.co for feedback, rankings, and rates.
The staff augmentation model lets you pick an expert with the exact skill set you need, regardless of the vendor. You can select three different programmers from three other firms or look for a vendor that can offer all of them at once. The choice is yours. Either way, you will hire needed software developers in a week.
What Risks to Consider when Hiring via IT Staff Augmentation Services
Increased Management. Typically, augmented staff does not work in the office together with other developers. Therefore, you need to establish in-house—augmented staff communication, align workflow, track task deliveries, and implement a timeline without any risks or miscommunications. It demands more attention from managers.
Privacy risks. As you hire an outsider, make sure your data is protected by NDA contracts and rules.
Communication. A huge role in communication will come into play if you are outsourcing nearshore or offshore team members for staff augmentation. Schedule developers from various time zones in such a way that a specific number of working hours overlap to facilitate real-time communication and collaboration. Establish communication tools and their purposes of usage. Use Zoom for video calls, Gmail for the most important information, and Slack for team communication.
Coordination. Except for communication, establish the project tools you will use: Nifty, JIRA, TeamClerk, Trello, Asana, etc. Create outlines that everyone has access to, as you may discuss these issues with an in-house team, and your remote employees will not be aware of them.
What Are the Different Types of Staff Augmentation Services?
Many staff augmentation services use more straightforward definitions of the hiring model on their homepages, but the essence of staff augmentation does not change – it involves augmenting the team with external talent with an emphasis on flexibility. When choosing a staff augmentation service, it’s essential to determine if the company has clear and concise messages that align with your needs.
We have created a classification of companies offering staff augmentation services and provided examples to make it easier to understand which services should be used for specific needs.
|Type of staff augmentation service||Description||Best for||Examples|
|Platforms for handpicked freelance talent||Freelance platforms with advanced screening processes and personalized support||Organizations that need to scale up or down their development team;|
Projects that need to move forward quickly;
Delegating non-essential tasks to outside vendors
|On-demand staff augmentation marketplaces||Online platforms that offer vetted, highly-skilled engineering talent employed by software agencies||YouTeam|
|Freelance marketplaces||Online platforms that offer freelance talent on a project or hourly basis||Minor projects and one-time assignments||UpWork|
|Specialized agencies offering staff augmentation services||Specialized / boutique outsourcing agencies with industry or project-specific expertise that provide highly skilled talent||When an organization needs specific domain experience or niche skills||Examples can be found on G2 and Clutch by filtering by service type, industry, and hourly rate|
Differences between IT Staff Augmentation and Other Outsourcing Models
Staff Augmentation VS. Dedicated Development Team
A dedicated team model provides companies with a specific composition of skilled professionals that depends on their project requirements. The dedicated team comprises software engineers, UI/UX designers, QA professionals, project managers, and business analysts. Like staff augmentation, companies hiring dedicated development teams don’t bother about retirement contributions, taxes, HR expenses, and medical benefits.
However, the difference between hiring dedicated teams and staff augmentation is that a dedicated team assumes you have less control over the outsourced workers. After defining the scope, selecting the talent, and holding kick-off calls to meet the team and set project priorities, the dedicated team is primarily managed by a vendor. In contrast, the staff augmentation model involves direct collaboration between the client and the engineering talent. In other words, you communicate and manage the augmented contractors the same way you manage your in-house staff.
|Staff Augmentation||Dedicated team|
Staff Augmentation VS. Independent Contractor
When you hire independent contractors, managing them is similar to staff augmentation or dedicated team models. If you hire a freelancer through the platform, then you must pay a commission. However, if you hire a freelancer directly, you are free from the commission fee and have less paperwork.
On the other hand, hiring an independent contractor bears more risks. For example, you can’t guarantee that the freelancer will not find a better deal and leave your project halfway while the staff augmentation model minimizes this risk.
Staff Augmentation VS Managed Services
Managed service has become quite popular and is expected to grow to USD $354.8 billion by 2026. The managed service model allows you to focus on the core of your business instead of IT service issues. What differs between staff augmentation, managed service, and project outsourcing is the level of control from the client’s side—the software development supplier manages the delivery model: processes and tools. In contrast, staff augmentation demands the most control.
Managed service model may be beneficial for you if you need to outsource the support of your day-to-day operations, such as software updates, operating software-as-a-service (SaaS), or platform-as-a-service (PaaS). It works as an all-in-one solution, monitoring critical functions and providing repairs. Staff augmentation focuses on outsourcing tasks and operations, while managed services focus on IT solutions and management.
|Staff Augmentation||Managed Service|
How to Find a Reliable IT Staff Augmentation Company?
Just like any other outsourcing model, staff augmentation has its pros and cons. However, the biggest challenge is to find a reliable and trustworthy partner, especially when sourcing in offshore destinations where risks are too high and unpredictable. That’s why if you opt for software development staff augmentation, consider the following points while choosing a dev shop:
Evaluate your needs. You should analyze what needs you want to cover through outstaffing. Are you looking for a specific skill set, or do you want to free up your in-house team for a business-critical project? Note the scope of the work for augmented staff and the possible duration of the project.
Check the partner’s experience and expertise. Look through reviews and testimonials from the vendor’s previous clients. You may check it on such platforms as Clutch.co. Also, pay attention to their credentials and work portfolio. Check if they had previous projects in your niche and a needed skill set in their stack.
Timezone. Would you prefer to hire a nearshore or offshore software development team? Check if the vendor has flexible or fixed working hours. It shows you the duration of overlapping time periods with your remote team and if real-time communication is an option.
Frequently Asked Questions
What is an example of staff augmentation?
Hiring contract engineers through staff augmentation is excellent for specific cases – for example, when a company needs to experiment, has backlogged or side projects, or wants to do an integration, but the core team doesn’t have the necessary skills. If the company is unsure how long these projects will take or knows they will be temporary, hiring people in-house is inefficient because it requires a few months of recruiting and a massive commitment to integrating them into the existing team.
In other words, if the company is still determining if it will need this additional talent in the next few months, it is better to hire contractors because it is a faster and more flexible way to address skill gaps.
What is the job of staff augmentation?
In a broader sense, the role of staff augmentation is to temporarily fill skill gaps with international talent with the required technical skills and experience. Staff augmentation is a flexible model that provides highly experienced contractors for as long as the project requires. Companies typically use the model to focus on the core aspects of the business, spinning off the less critical projects to external contractors.
The model addresses the challenges of traditional hiring by taking care of talent selection and pre-interviewing. In addition, companies that hire contractors through staff augmentation do not have to worry about administrative and recruiting costs, office equipment, health insurance, recruitment contribution, and taxes.
What is the difference between outsourcing and staff augmentation?
Organizations that hire an outsourcing agency have minimal management control over the agency’s technical talent and how they work. Hiring an outsourcing company typically involves defining the scope, selecting the talent, and setting project priorities. After that, the dedicated team is primarily managed by the vendor.
In contrast, companies that hire contractors through staff augmentation manage software engineers directly and may communicate directly with each of them.
How does the staff augmentation process work?
The staff augmentation model leverages software engineers who work full-time at outsourcing agencies. Typically, staff augmentation companies vet developers before presenting them to the client. They check technical skills, developer’s portfolio, English proficiency, communication skills, and experience working remotely.
When the client shares its requirements, the staff augmentation company generates a list of candidates that match the client’s needs regarding skills and experience, tech stack preferences, interests, and personal qualities.
After conducting interviews, the client selects the perfect fit and signs the contract. The staff augmentation company assists the client in scaling up or down the team and helps with financial and legal issues.
For example, YouTeam pre-interviews middle and senior developers to ensure they are the best fit to meet clients’ needs. The platform then provides a vetted list of candidates within 48 hours of contact. YouTeam also automates contract signing and invoicing between clients and software development vendors. The locally-compliant contract ensures the secure IP transfer from the engineer to the vendor and from the vendor to the company.
What is the difference between staffing agency and staff augmentation?
The staffing agency helps identify and screen the talent the organization wants to bring in-house and integrate into the team. In contrast, staff augmentation is a flexible solution that provides full-time or part-time contractors based on project needs.
The contractors hired through staff augmentation are managed directly by the client, just like in-house employees. However, they are paid hourly or monthly, and companies that hire contractors don’t have to worry about health insurance, retirement contributions, and office equipment because the staff augmentation service has already included them in the developer’s rate.
What is an augmented workforce?
An augmented workforce is an engineering talent that joins the company temporarily, depending on the project’s needs. Companies hire augmented talent to speed up the development process, offload non-essential tasks from their internal team, or when they need a unique skill set or expertise in a specific area.
What is the difference between temporary labor and staff augmentation?
As defined by the International Labor Organization, temporary employment means workers are hired for a specific period only. Such work includes fixed-term, project- or task-based contracts, and seasonal or casual work. This type of engagement is commonly associated with finding local talent.
Staff augmentation also involves contractors working temporarily, but the term is closely related to offshore and nearshore outsourcing, as it often utilizes an international talent pool.
How do I choose staff augmentation services?
Companies looking to hire developers through staff augmentation should find reputable marketplaces or development agencies that meet the following criteria:
- A talent pool of middle- to senior-level software engineers with the required skills and experience.
- Experience working with US- and EU-based clients as evidenced by case studies and client references.
- Strong English language and communication skills.
- Ability to provide documentation for due diligence (legal entity and bank account verification, talent background checks).
- Time zone proximity is critical for well-organized real-time collaboration.
Why is YouTeam the Best Partner to Help You with Staff Augmentation?
YouTeam is the marketplace for on-demand engineering staff augmentation. It helps tech companies quickly scale their engineering teams by leveraging a network of 50,000+ vetted contractors from Latin America and Eastern Europe.
The talent marketplace was designed to help business owners hire better developers and achieve maximum efficiency with the staff augmentation model. YouTeam only works with trusted vendors whose specialists have proven experience working on real-life projects around the globe. You will receive a deliberately selected CV of a suitable candidate within 48 hours.
As soon as you find the best-matching developer team profile, the vendor will take care of a smooth and seamless team integration while focusing on core business tasks.
There are no hidden costs for our clients. When you choose to hire through YouTeam, the sourcing and interview process is entirely free. The only thing you pay for is the developer’s time, but not before you have a signed contract. YouTeam clients fully trust the platform’s vetting process and choose to stay with YouTeam after trying our matching service.
Still have questions about staffing or outsourcing? We’re here to answer all the questions and help if you need to enhance your current workforce.