Future-Proof Tech Sourcing: Staff Augmentation to Manage through Business Cycles

Mike McAuliffe

Mike McAuliffe

Jun 22, 2022 | Accelerance Blog

Various models for accessing skilled tech talent took on new importance during the pandemic.

 With pandemic conditions pushing the normalization of remote work, distributed and external resources became an increasingly more “business as usual” part of the work model. Chief among them was staff augmentation, a tried and tested way to reach out for help rather than attempting ambitious projects completely in house.

At Accelerance, I’ve seen staff augmentation save the day in a variety of circumstances - before, during, and after the pandemic. One was a European based multinational company that was struggling to access hard-to-find skills. Then there were two expanding unicorn firms that were growing beyond their ability to recruit internally.

Finally, a health tech SaaS company was desperate to reduce its expense burn rate after the business interruption we all experienced in March of 2020. The CTO ended up building an offshore staff augmentation team to cover product development needs for an annual savings of 70% in developer rates.

Accelerance has been helping businesses like these, across a wide range of industries, grow their workforce with skilled developers for decades. But the COVID disruption took things to a new level. Demand for staff augmentation rode the wave toward digitization and virtual work models that organizations suddenly faced to survive in a new reality.

Understanding Staff Augmentation and When It Works Best

What exactly is staff augmentation? If you understand that, you’ll know why it’s on a roll now. The wave of digitization that the pandemic unleashed ran into a severe talent shortage that made recruiting skilled staff a time-consuming, expensive experience. IT leaders, along with technical teams stretched thin, turned to software development outsourcing as a way to add scarce and specialized skills.

Staff augmentation is one of the best options to close skills gaps fast. It’s a type of outsourcing that involves sourcing services from an external IT provider on a contractual basis to complement and boost the skills and capabilities of an existing in-house team. Staff augmentation can be used for a range of situations- from accelerating the development process for a new business application to gaining added skills for a current project to bolstering entire programs of work.

Since the pandemic, staff augmentation has grown in acceptance as one solution to the record-high technology skills shortage. No wonder, given the scale of the issue.

 Staff augmentation is a business model that is particularly suitable under certain business conditions that require flexibility and/or speed in resourcing.

Here are the reasons why companies choose staff augmentation:

 

 

Getting Work Done: How the Pandemic Changed Everything

The pandemic forced companies to right-size and rethink their businesses almost overnight. It uncovered flaws in the traditional, more rigid workforce model of predominantly in-house teams.

The COVID outbreak shook every aspect of corporate America. Companies at first pulled back on IT spending. Technology and software development initiatives seemed to come to a halt.

Not for long. Solutions needed for remote work and increased online commerce advanced the speed of digital transformation, increasing the need for technical skills and investment. Tech-driven companies had to pivot from downshifting to high gear.

It’s the new business reality: Seismic events that erupt and boomerang strategies. We’re seeing it again with the recent surge of corporate layoffs including high-profile waves in the tech industry. Inflation and economic uncertainty are causing executives to scramble to find efficiencies.

It’s never been more true that survival of the fittest in business means adaptability. Companies that prevailed through the last few chaotic years had the muscle to adapt, fast. That means being able to cut back or scale up on the whims of the latest business trends. Increasingly, IT leaders have begun exploring more “hybrid” work models. They involve in-house staff supplemented by external specialists or teams that can be aligned to ongoing fluctuations in business.

 Against this backdrop, staff augmentation has proven its worth. It allows for fast response in a company’s cost and staffing levels to offer a competitive advantage. We’ve seen the impact in two emerging trends: 1) Organizations with strong external resourcing relationships have fared better in the recent crises and 2) IT executives who never thought of outsourcing for staff augmentation are reaching out to inquire about outsourcing options.

 So it's no wonder that staff augmentation is gaining momentum. It's expected to deliver massive growth in global revenue over the next five years.

Staff-Augmentation-Incremental-Investment

To Augment or Not? Making the Right Choice

You’ll have to weigh the advantages and disadvantages of a staff augmentation model carefully to determine whether this approach is right for you at this point in time.

 Yes, augmenting your in-house team with real pros from an outsourcing partner can help you fast-track projects, sidestep the lengthy recruiting process and make it easier to adapt to changing business conditions.

But outsourcing of any kind comes with its own risks that fundamentally stem from the fact that you are relying on partners to deliver who have not lived and breathed your company culture. Working with carefully screened outsourcing partners can mitigate the risks of staff augmentation going wrong.

 But it’s good to know the potential pros and cons first:

 

 

Evaluating Different Resourcing Types

Staff augmentation comes in all shapes and sizes. Here are some of the common options for businesses to augment their in-house software development teams:

Choosing the Right Structure-01-png

Clarifying Augmentation versus Outsourcing

Our clients often ask us to explain the difference between staff augmentation and project outsourcing. Good question. They’re both based in providing skilled resources to fill software development needs - but there are some distinct differences.

  • Staff augmentation adds virtual resources - whether individuals or teams - into the client’s project or in-house team to supplement the existing resources.
  • Project outsourcing involves turning over accountability for an entire development project - or parts of an enterprise program - to an outsourcing firm for management to deliver the desired

When is staff augmentation more suitable than project outsourcing (and vice versa)? The chart below contrasts the considerations for which model to use.

We are agnostic about the model of staff augmentation sources you choose. All approaches have their place in the technology world. A consulting firm like Accelerance has experts to help advise you about the right model for your business needs and how to execute it flawlessly.

Making It Happen: The Step-by-Step Approach

Choices, choices, choices - there are thousands of staff augmentation companies to choose from. How can you know which groups are legitimate and which are less competent?

After over 20 years of matching clients with software outsourcing partners, we’ve fine-tuned a highly successful process for helping clients put staff augmentation in place. We can assist you with finding the right software development partners, whether you are looking to bring a few extra people on board to get a project finished in time or are looking for a more structured team to transform your business.

 Here’s how we do it:

 

The Bottom Line: It Counts

Like I mentioned earlier, the turmoil of the pandemic disruption and economic uncertainty since have caused companies to focus back on staff augmentation outsourcing for cost-cutting purposes.

Consider this scenario:

 Hiring a full-time software developer on an annual salary of $75,000 costs much more than that in reality. Factoring in recruitment, management, talent development costs, as well as health and insurance benefits, performance bonuses and office rental, can push up the real cost of hiring that developer to around $150,000.

 Staff augmentation allows you to cut your overhead for software developers by avoiding many of those costs, particularly if you are using the services of a near-shore or off-shore outsourcing company. Depending on which destination you source from in the world, you can realize cost savings of 30% to 70% from staff augmentation versus onshore software development outsourcing.

Indeed, the availability of skilled software developers in regions including Latin America, Central Europe and Asia, means considerable savings are to be had when it comes down to the labor costs associated with software development. For a detailed analysis of software developer rates across the world, check out our 2022 Global Software Outsourcing Trends and Rates Guide.

Below is an estimation of the labor cost benefits you can achieve through staff augmentation outsourcing for several key roles:

Tech-Cost-Savings

 

Expert Advice Makes All the Difference

The current market conditions have made it harder than ever to recruit the software development talent you need to deliver your products and services.

 But staff augmentation and software development project outsourcing offer you multiple options to tap the expertise and capability you need and reduce your costs in the process. Your chances of success increase when you work with an experienced outsourcing advisor.

 Your advisor should have the experience across a range of outsourcing models including staff augmentation to offer you the most flexibility in resourcing to your needs.

Accelerance is your go-to advisor for exploring staff augmentation as an option for you. As the global software outsourcing authority ®, we’ve worked with organizations of all sizes, in every possible model, in virtually every industry.

Want to find out how we can help you best use staff augmentation to manage your software development resourcing needs?

Get in touch with an Accelerance advisor today.

Mike McAuliffe

Mike McAuliffe

In his role as Managing Director, Mike advises technology and technology-enabled companies on effective strategies when building high-performing, global software engineering teams. He is a highly accomplished executive, with proven ability in innovating and implementing business-building strategies for recognized Fortune 500 companies. He seeks to foster a culture of continuous improvement as well as maintaining adaptable and responsive practices that meet changing market conditions and business demands