April 19, 2024
When you need to add talent resources quickly while maximizing cost efficiencies, you have a couple of good options: staff augmentation and outsourcing. In the post-pandemic world, with remote work and global talent easier to leverage than ever, both can be great options for businesses in a variety of industries, especially for software development needs. While some people use the terms interchangeably, that’s a mistake. Before diving into reducing overhead costs through staff augmentation, let’s look at each.
What is Staff Augmentation?
Staff augmentation involves temporarily hiring skilled professionals to supplement your existing workforce for specific projects or to address skill gaps. The classic example is using temporary staffing services like Kelly Services or Robert Half for clerical and administrative help. Of course, when we’re talking about software development, you need to partner with a specialized service provider to find the skills and talent you need.
These augmented workers fit into your in-house team when needed, working under your company's direction and management. It’s a great way to add specialized talent only when you need it. Augmented staff slots in where you need them, like missing pieces of a puzzle, and they hit the ground running. Your staffing services partner handles all the recruitment, vetting, and benefits the worker gets.
You maintain control over project management and strategic decision-making. Along with that, you’re entirely responsible for the outcome of the project and the parts in it. Augmented staff are usually either freelance contractors or acquired from a specialized staffing agency or services company. You have access to a specialized task force you call on when needed.
How Does Staff Augmentation Differ from Outsourcing and Employment?
Full outsourcing involves handing over an entire project or business function to a third-party provider or an outside team. The outsourcing company assumes full responsibility for managing the project, resources, and outcomes. This approach relinquishes a degree of control in favor of the external company's expertise and cost-efficiency.
Of course, employment comes with its benefits and drawbacks. You have complete control over when the person works, what they do, and how they do it, but you also have to go through the time-consuming process of vetting,
hiring, and onboarding. Then you assume all the costs of training, software licenses, and hardware, to say nothing of benefits and employment taxes. Your organization is completely responsible for the output of the employee and managing that employee, from start to finish. You’re also paying them through the ebbs and flows of the business, barring layoffs. Employment is more of a long-term investment and isn’t an excellent option for fast scaling of teams, up or down.
Reducing Overhead Costs through Staff Augmentation
So how does an organization start reducing costs through staff augmentation? First, take a look at exactly where those savings are coming from. Once you know where you’re going to save, you can make a plan for how to reduce overhead costs with staff augmentation.
Direct Cost Savings |
Staff augmentation offers significant financial advantages thanks to its pay-as-you-go model. Unlike traditional employees, augmented workers don't come with the burden of long-term commitments or the costs of hiring. Recruiting and hiring specialized workers, especially in software development, can cost tens of thousands of dollars. The Small Business Administration says to plan on 1.2 to 1.4 times the salary of an employee to find and hire the right person – no small amount. The more specialized the skill set, the higher that amount will be (and the longer it will take!). Beyond hiring costs and salary, you’ll also save on the costs of providing benefits packages, paid time off, insurance, or other overhead costs typically associated with full-time staff. This translates into immediate, demonstrable savings when an augmented worker is brought on board. |
Indirect Cost Savings |
The cost-efficiency of staff augmentation extends beyond direct expenses. The flexibility to scale your workforce up or down perfectly aligns with fluctuating business needs. Need extra developers for a big project? Augment your team. Project complete? Scale back down. That process is much faster than trying to find the right full-time employee in a tight market, and when it comes to the advantages of staff augmentation for project management, time is money. Augmenting avoids the costs tied to hiring and potential firing cycles within the traditional employment models mentioned above. Additionally, training expenses are often minimized. Augmented workers arrive with the skills you need, reducing the need for extensive onboarding and development programs. |
Remote Work's Impact |
The rise of remote work has significantly amplified the cost-effectiveness of staff augmentation. Access to talent is no longer bound by geography. Companies can tap into a global pool of skilled professionals, often in areas with lower costs of living. This translates to lower rates for their expertise. Additionally, remote setups reduce or eliminate costs associated with traditional office space and infrastructure. |
Managing Staff Augmentation Effectively
- Seamless Integration with Existing Teams: The success of staff augmentation hinges on streamlined onboarding. Instead of lengthy, in-depth company-wide orientations that talk about culture, benefits packages, and other items that don’t apply to these “task force” team members, focus on the essentials for augmented staff.
A clear project scope, introductions to key team members, and access to necessary tools and communication channels are vital. Pair augmented workers with internal “buddies” to answer everyday questions and help them navigate your company's work style and communication culture. This reduces overhead costs and learning curves while ensuring they quickly become productive members of your team. - Effective Management Oversight: While augmented staff often possess specialized skills, they still benefit from management oversight. Set clear KPIs and project milestones in collaboration with both the augmented worker and your professional services partner. Regular check-ins ensure alignment with project goals and provide opportunities to address any issues before they become roadblocks. The right partner will go beyond making sure timesheets are completed. Proactive communication, combined with project management and communication tools, helps maximize efficiency and reduce the risk of expensive rework or delays.
- Avoiding Common Pitfalls in Staff Augmentation: Miscommunication, skill mismatches, and overall project misalignment are risks to address proactively. Thorough vetting during the selection process is essential – check references and portfolios. Your specialized services partner will do this, but it never hurts to review the background yourself before agreeing to a placement. Clearly outline project requirements both to the service partner and the augmented worker. Maintain open communication channels, addressing any concerns early on as everyone gets adjusted to working together. Regular progress summaries with augmented staff and your in-house team prevent nasty surprises at project deadlines.
By implementing these strategies, your organization can embrace the benefits of reducing costs through staff augmentation while successfully integrating skilled professionals into project workflows. A focus on focused onboarding, effective management, and proactive communication sets the stage for a positive and productive experience.
It takes strategic planning and proper management once the placement is made to make the most of your augmented staff, but the benefits often outweigh any challenges, especially in terms of direct spending and time saved. Whether an employee, full outsourcing, or staff augmentation is right for your organization depends simply on your needs at the time. Consider all your options before deciding. Our software outsourcing advisors can connect you to our global network of certified partners with the goal in mind of getting you the right fit.
