Most businesses, at some time or another, need a few more hands on deck. And not just any hands, but people who are skilled, trained and certified for the job you need them to do. Hiring these people in the traditional way can be a time- consuming and drawn-out process involving job advertisements, interviews, referencing, onboarding and endless paperwork. This is unhelpful if your business has mission-critical deadlines to fulfill. For some companies, and IT companies, in particular, staff augmentation could be the secret weapon when you need rapid access to skills or headcount.
Staff augmentation is a way for businesses to scale up or down quickly using temporary workers instead of permanent employees.
There are plenty of technical definitions of staff augmentation out there, and they all go something like this: the "allocation of dedicated technical resources, usually offshore, hired as overseas development extensions of in-house application development teams on fixed or flexible terms and conditions." Since that's probably enough jargon to crush your soul, a more accessible definition is simply – hiring a contractor instead of a permanent employee for skills and knowledge assistance.
Staff augmentation is as straightforward as using temporary workers or contractors to fill short-term positions within your company, usually through an agency that keeps a database of such workers. For example, suppose you have a special project that requires another three hands on deck, but the project will only last for six months. You could take on permanent employees but there will be no work for them to do when the project is over, and firing them could get messy. An obvious solution is to bring in trained and qualified workers who can hit the ground running and blend into your team. The idea is to boost or "augment" your current workforce so seamlessly that your permanent workforce will not even realize their colleague is a contractor.
Staff augmentation firms, like temping agencies, offer a middleman service. They keep a cadre of talent on their books which businesses can tap into whenever they need additional human resources. These resources are employed directly by the vendor, so the staff augmentation firm does all the behind-the-scenes work of recruiting, background screening, hiring and payroll. All a business has to do is define a need, and the staff augmentation firm will deliver a group of (hopefully) quality candidates. If your selected contractor doesn't work out, you get a quick replacement.
Another feature is the depth of service. Because the agency maintains a large and various workforce with different credentials and skill sets, you can quickly staff an entire project to respond to business objectives. The staff augmentation agency can help you evaluate your existing staff and determine which additional skills are required, which makes the process turnkey for the client organization.
Staff augmentation is frequently used in the IT and software engineering industries, but it can be helpful for any business that needs human resources to deal with a special project or business spike. Here are some common scenarios:
- Your permanent staff is already working overtime, but a new project has landed. You need extra bodies to ensure that customer service does not falter.
- An employee with critical knowledge has announced plans for an extended period of absence, for example, a sabbatical, illness recovery or maternity leave, and you need temporary cover to plug the skills gap,
- A new project requires specialized skills that your current employees do not possess. You need a consultant contractor to handle project implementation and train up your staff.
- The company has been unable to recruit the right talent, perhaps hiring some people that did not work out.
- You're thinking about increasing your team permanently but are not sure if you have enough need. Staff augmentation can help you test a larger staff before making direct hires.
Whatever your staffing needs, augmented staffing works best when you have a management system set up to provide project oversight. That way, you can fill crucial positions with a variety of contractors and freelancers in the knowledge they will slot right into your existing operating structure, just like regular employees.
The main benefit to staff augmentation is that the contractors you hire can jump straight in and get to work without needing to be walked through your process. There are hardly any hiring formalities, so you're not wasting valuable time with recruitment, background checks and onboarding. Perhaps more significantly, you're not taking on the burden of additional payroll duties. You can simply ramp up and down to meet fluctuating staffing demands without shouldering the cost associated with hiring permanent, full-time employees. Some other pros associated with staff augmentation include:
Control over staff: Contractors slot into your existing structures like regular employees so you can closely manage your resources.
Integration: Organizations often find it more effective to integrate contract resources with existing business processes than to try to manage off-site or outsourced teams.
Reduce employee burdens: Staff augmentation reduces the burden on your permanent workforce, which may reduce the rate of stress and absenteeism.
Meet aggressive project timelines: Staff augmentation may be the only option for getting the work completed when you have no lead time for a project, and you need someone "yesterday."
Scalability: With staff augmentation, you can scale up and down without taking on payroll liabilities, as well as adjust your team size based on revenue upturns or client need.
Employee acceptance: Internal employees often feel less threatened by a staff augmentation model more than a project outsourcing model. It means there's little risk of their entire job description being outsourced.
Reduce the labor overhead: Staff augmentation is a pay-as-you-need model where you pay the rate multiplied by the number of hours worked with no ongoing commitment. This may help your business to reduce the overhead associated with hiring full-time labor such as benefits and taxes.
As with most things in business, the process of staff augmentation isn't entirely risk-free. Here are some of the risks associated with staff augmentation:
More supervision: Supplementing your human resources through staff augmentation means you'll need to dedicate more supervisory staff and management time to managing the growing number of bodies in the workplace.
Time-focused: There tends to be less focus on results, as the commitment from the staff augmentation firm is expressed purely in terms of hours of work. While using a quality contractor should deliver the results you need, ultimately, the responsibility for managing the project stays within the organization. You're purchasing a human resource whose only responsibility is to turn up and perform a specific number of labor hours. He's not being paid according to the results he delivers, as some outsourcing companies are.
Replaceable staff: Staff augmentation is based on the concept of a "faceless, replaceable skill" – if you don't like one contractor, you quickly replace him with another. This may be acceptable for churn-type tasks and coding that happen in the background, but it's not so good for job roles that are either client-facing or require trust-building as part of a close-knit team.
Poor cultural fit: Augmented staff may not be aware of or fit in with the existing culture and protocols of the organization – there's always a learning curve, no matter how qualified the contractor.
Higher costs: Used long term, staff augmentation has a potentially higher cost than other outsourcing models.
You can assume with certainty that staff augmentation will represent a higher overall labor cost if you rely on it as a permanent operating model. The staff augmentation firm will add an overhead and margin to the direct cost of labor, and the contractors themselves may cost more than you would pay for permanent staff performing the same job function. In the short-term, the reduction of hiring/de-hiring costs might offset the increased labor cost. When used as a long-term solution, however, that offset is probably going to be lost.
Staff augmentation can be either onshore or offshore or both. Many staff augmentation firms specialize in either onshore augmentation, where the contractor works exclusively for you from your offices or the agency's U.S.-based offices, or offshore, where the contractor works exclusively for you from the agency's offices located overseas. Offshore augmentation services tend to be more cost-effective. The drawback is you're getting a virtual team, possibly located in a different time zone. While you still have direct access to your offshore resources and can directly assign work to them, team integration may be more challenging when the resource is based overseas.
Staff augmentation is not the same as outsourcing – outsourcing is a completely different delivery model. With outsourcing, you'd pass the responsibility for executing an entire project to another firm. This firm would perform the work using its resources, skills and people. The model is results-centric, meaning the responsibility for achieving results lies with the outsourcer. As such, the commitment is usually expressed as "service levels," which describes precisely what results the outsource company is responsible for. The price is tied to service levels where appropriate, so the cost is transparent from the get-go. For these reasons, outsourcing tends to be a good option if your main driver is to minimize costs and project risk.
The main risk of outsourcing is that you lose management control of the project. Everything from high-level strategy down to individual resources sits with the outsourcer, so you're essentially handing control of an entire business function to a third-party. As such, your reputation may rest on your ability to find a quality supplier.
As to the other risks associated with outsourcing, it's not unusual to experience problems with:
- Service delivery, which may fall short of expectations,
- Data security, which may be at risk when you transfer confidential information out of the business.
- Lack of flexibility if your outsourcing contract proves too intractable to accommodate changes to the project or the business function.
- Instability, if the outsourcing company changes hands, hits staffing difficulties or goes out of business.
As you can see, many of the disadvantages of outsourcing are the advantages of augmented staffing, and vice versa.
Managed service is another term you'll hear in connection with the outsourcing of various IT job descriptions. While there's no simple, precise definition for managed services, it usually applies in the area of planned preventative maintenance – keeping your IT systems up-to-date, monitoring critical functions and implementing fixes when something goes wrong. The idea is to reduce the risk of downtime that could impact your core business operations. Managed services usually follow the outsourcing resource model regarding how it's structured. Here's a quick rundown of how it works:
- Managed services take responsibility for your tasks or project for a set project or monthly fee.
- The managed-services provider works remotely on a "set and forget" basis, so you don't have to manage the implementation.
- The burden of maintaining IT is transferred from you to the managed service provider.
- Your business benefits from predictable pricing and the ability to focus on core business concerns rather than IT management chores.