From the medieval typewriter to getting real-time updates with a simple click of a mouse, the work culture and environment have come a long way. Today, getting work done and workforce collaboration has never been easy, all thanks to the massive adoption of technology. Instead of being a preserve of multinational corporations, modern technology has allowed even small businesses to thrive and become more self-dependent.
On the flip side, however, the increasingly technologically-oriented work environment requires a new generation of workers with tech-savvy skills and abilities. Ordinarily, this means two things; employers putting in place ongoing training programs or using staff augmentation companies to bridge the skills deficit.
In this article, we are going to put in-house training against staff augmentation, establish the benefits of each, as well as probe the downsides. At the end of it all, you should have a clear answer on what works best.
What Is Staff Augmentation?
Staff augmentation is a hiring strategy that allows companies to improve efficiency by ‘augmenting’ different processes or projects. Essentially, it entails hiring outside personnel with knowledge and skills temporarily – guided by the prevailing business needs.
In-house hiring, on the other hand, entails hiring an employee internally from the existing force or equipping them with new or additional skills to facilitate them climb the corporate ladder.
IT Staff Augmentation Providers vs Inhouse Training/Hiring
Although it’s possible to use either staff augmentation or in-house hiring/ training to bridge the skills gap within your organization, several factors make one better than the other. Let’s briefly look at two of the most prominent.
Hiring a new employee can be a costly affair. According to a recent report published by The Society for Human Resource Management, the average cost of recruiting a new employee in the US stood at $4,129 in 2022. The talent management and development company, E.L. Goldberg & Associates puts the number at three to four times the candidate’s salary. As such, if you are hiring for a job position that pays $50,000, you may spend $150,000 or more to fill that role.
As a business, hiring internally leads to a high net recruiting value, as well as loss of revenue due to vacant positions, which ranges between 0.2 and 2 times the basic rate of a senior-level position. Along with that, you have to shoulder the cost associated with hiring permanently including payroll, insurance, and vacations, something that staff augmentation IT companies take out of the way.
If you are a small business startup looking for a senior engineer with fifteen years of Python experience, chances are, a multinational corporation like Facebook is looking for the same. In an industry like IT, where the average hiring time is 44 days, the last thing you want to do is to be competing with industry giants like Facebook to fill a position if you don’t have the skills within your in-house team.
Luckily for you, IT staff augmentation companies maintain a large pool of pre-vetted candidates, allowing businesses to fill positions in as little as four days. This is particularly important in saving the revenue that would have otherwise been lost due to a vacant position or missed deadline as a result of limited in-house skills.
From the above analysis, it’s important to see why staff augmentation provider/s have become the hiring choice for many businesses. And now to the big question; what are the different categories of top staff augmentation services?
Types of Staff Augmentation Services
Top outstaffing companies work analogously to how On-Demand businesses build their workforce depending on the market and hiring needs. The type of augmented service you choose depends on your hiring needs and the scope of the project. Below are some of the common types of augmented services that you can choose;
All top IT staff augmentation companies offer two primary types of staff augmentation services: Short-term and Long term:
As the name suggests, short-term staff augmentation services entail hiring external employees on a short-term basis or when in-house employees aren’t available. Long-term staff augmentation services, on the other hand, are applied when a project is running for a significantly longer period, and there is a skill gap or a need to cut operational costs.
Staff augmentation can further be divided into three more sub-categories:
- Commodity. This is applicable when a company is looking for reliable workers to perform general task/s that don’t necessarily require a specific skill set like manual labor or warehouse work.
- Skill-based. This resource augmentation model is applicable when looking for specialists with specific skill sets, although not necessarily critical.
- Highly skilled. This is implemented when a company is looking to fill a position that requires advanced skills that have been gained via training and experience over a long period.
Pros & Cons of Staff Augmentation
Just like many other hiring models, staff augmentation services do have their pros and a fair share of downsides.
Let’s begin with the benefits;
Pros of Using a Staff Augmentation Firm
Pro #1: Cost Savings
The first benefit of staff augmentation is its cost saving. As indicated earlier, the average cost of hiring a candidate in the US is four times their salary rate and 44 days to fill a vacant position. Cooperating with top staff augmentation companies can reduce the cost of hiring new staff by 20-30%.
What’s more, most recruitment agencies offer a guarantee for selected candidates, meaning if they don’t pass the probation period, a replacement is offered immediately at no cost.
Pro #2: Scalability
An outstaffing company can help your organization scale its operations. You can take projects of different requirements and magnitude, as well as scale your workforce (upwards or downwards) depending on your needs. But that’s not the best part; the augmented staff model helps your company diversify its services and provide high-quality solutions with temporary expertise.
Pro #3: Access to Larger Talents
But perhaps what makes staff augmentation popular among business owners is that it allows them to hire the best talent without any geographical limitations. You can hire from practically any corner of the world, which is particularly important in enriching the development process through new thought processes.
Pro #4: Operational Efficiency
Small business startups often have to shoulder substantial overhead costs with minimal return on investment. In such instances, these companies can hire remote developers or dedicated development teams to get the best talent in the market, and of course, cut costs.
Pro #5: Lessens the Need for Training
After hiring new employees, the next natural step entails training and onboarding them. With outstaff company services, however, you can squeeze the time taken to assimilate, ultimately improving your company’s productivity and capacity as the temporary specialists take less time to adapt.
Cons of Staff Augmentation
Although staff augmentation has an impressive list of strengths, some issues can arise when not handled properly. Some of the cons of this hiring model include:
1. Higher Long-Term Cost
One of the primary reasons businesses utilize staff augmentation is to bridge skill shortages in the short term. If the project significantly overruns its deadline, the costs can start racking up real quick. This is especially the case if you are paying on an hourly basis, where more hours mean more money spent. With that saint, however, some agencies do allow you to negotiate in such instances, although not all the time.
One of the merits of staff augmentation is the significantly less time it takes to onboard new players. However, like any other type of hiring model, you still need some time to orient the new team.
3. Added Processes
When an employee joins a company — either temporarily or permanently — there is an increase in the resources needed for oversight and management of the team.
4. Lack of Internal Knowledge
Some particular projects within an organization may require prior knowledge connected to the client or the workplace, which is something an IT outstaffing company may not have. Having said that, these agencies invest in resources to ensure a seamless gelling of teams in the least amount of time.
Today, the demand for qualified software developers and IT specialists is more significant than ever before. Whilst the demand had been steadily growing over the past two decades or so, the COVID-19 pandemic and subsequent lockdowns increased the demand exponentially. As a result, companies that had overlooked the importance of digital transformation started facing an imminent existential threat. And even without COVID-19, pivoting toward the digital world was an inevitability — the pandemic just accelerated the process.
Naturally, this spike in demand for tech products has seen an unprecedented uptake in the demand for IT specialists, as well as proven a fertile ground for flexible staffing solutions. At the helm of these hiring solutions is the staff augmentation model, all thanks to its flexibility, cost saving, and quick turnaround time.