As a tech-enabled startup, you have an innovative product or service as the cornerstone of your startup's success. As your solution grows, you need a regular release cadence to secure loyal users and demonstrate the ongoing development of your product to investors. All this is impossible without a trusted crew of tech specialists ready to brave any challenge on time and within your budget.
The global talent shortage, rising costs of hiring, and economic uncertainties create a perfect storm of factors that prevent companies from getting the skills they need on short notice. Staff augmentation has become one of the few hiring models that can get companies an extra pair of hands without the commitment and expenses of long-term recruitment.
However, as beneficial and flexible team augmentation services are, they may not be a good mesh for every company in a talent crunch. Today, we're here with this A to Z guide to help you wrap your head around the pros and cons of staff augmentation.
What is staff augmentation?
Staff augmentation is an outsourcing model that allows companies to temporarily extend their existing team with skilled tech resources. Augmented developers or other specialists become a part of the in-house team on a contractual basis to fill the expertise and skill gaps. Put simply, it’s like bringing in a crack team of experts to solve your problems, with no long-term commitment needed.
Say you have a custom healthcare software solution and want to augment it with AI, but your team doesn't have the required skills to pull that off. Instead of going through the whole hiring process yourself, you can reach out to an IT staff augmentation vendor and fill the talent gaps faster and cheaper. Vendors will do all the heavy lifting—finding the best talent, vetting candidates, and handling the paperwork.
When you need staff augmentation, four cases
We’ll be honest: staff augmentation is not a silver bullet that can patch up processes in every company. Not everyone needs it, and not everyone can benefit from it. With that said, let’s see when this hiring strategy makes the most sense.
When you need to validate your idea
In the early stages of your product idea, you don’t want to invest in something whose potential is still unknown. The staff augmentation model allows you to hire a few tech specialists temporarily so you can develop a prototype or a proof of concept without the long-term commitment of hiring permanent employees. And if your idea proves to be a real deal, you can proceed with scaling up your dev team and investing further in the product.
When you’re on a time crunch
Startups often operate on a tight deadline, preparing for the next funding round, rushing to launch their product ahead of the competitors, or swiftly incorporating user feedback. By engaging staff augmentation talent in the project, companies can accelerate their development cycle without compromising the quality of the deliverables.
When you need a bridge to hire
Augmented tech talent can become a lifeline for startups when they’re looking for permanent team members but don’t want the development process to stand idle. So before they hire full-time employees, they can temporarily hire augmented tech talent to fill the gap and keep their projects moving forward.
When you’re launching a new initiative
Another case when it pays to engage temporary talent is when a startup plans to launch a specific project or initiative but doesn’t want to disrupt its core operations. For example, a healthcare company has a telehealth platform that offers virtual consultations in various specialties. After a while, a company decides to launch a conversational AI chatbot to go with the platform — but without stretching its resources too thin. And that’s when staff augmentation comes into play.
💡Tip: Overall, we recommend hiring augmented tech specialists for short-term projects that can be completed within less than two years.
Staff augmentation vs. project-based outsourcing vs. in-house team vs. managed services
For companies, staff augmentation isn’t the only way to get skilled professionals on board. Based on the project scope, budget, timeline, and other factors, companies can also resort to other outsourcing models. Let’s put the most popular outsourcing models head to head and see what makes staff augmentation different.
Staff augmentation
When opting for staff augmentation, you gain the same level of control over the development process as you would with in-house employees. You'll be the one who chooses the candidates and manages the software development processes and the development team. At the same time, you don’t have to worry about administrative hassles as these are handled by the vendor. Flexible, cost-effective, and fast, this hiring option provides short-term access to specialized, pre-trained skills exactly when you need them.
Managed services
Unlike short-term staff augmentation, this hiring model implies long-term collaboration with the vendor controlling all or select expertise areas of a project. From assembling the team to running back-end operations and processes, a managed service provider allocates dedicated specialists that completely remove the burden of a given tech task from you. This engagement option lends itself well to maintenance and support services.
Project-based outsourcing
Project-based outsourcing allows you to get all aspects of software development — from assembling a team to managing processes — off your hands. There is no need to have an internal tech-savvy manager or spend time mentoring your remote development team. Project-based outsourcing is also highly scalable, allowing you to ramp up or down your team on demand.
In-house development team
By hiring an in-house team, you have direct oversight over the work being done and can build internal expertise over time. However, assembling an in-house team requires significant investments in terms of money and time. Also, if your company isn’t tech- or software-oriented, it may be more cost-effective and efficient to outsource development for a single project rather than hiring in-house specialists.
If you aren't sure which outsourcing model is suitable for your project, we recommend consulting with the vendor.
| Criteria | Staff augmentation | Project-based outsourcing | Managed services | In-house team |
|---|---|---|---|---|
| Team | Dedicated tech specialists, hand-picked based on your requirements | Selected from the service provider’s team | Dedicated and exclusively recruited team | Fully dedicated and exclusively recruited team |
| Tech stack selection | Client | Service provider | Service provider | Client |
| Office and workstations provided by | Service provider | Service provider | Service provider | Client |
| HR management | Service provider | Service provider | Service provider | Client |
| Payroll | Service provider | Service provider | Service provider | Client |
| Project management | Client | Service provider | Service provider | Client |
| Control | High | Medium | Medium | High |
| Flexibility | High | High | High | Low |
| Expertise | Access to specialized skills and internal tech manager | Access to specialized skills | Access to specialized skills | Requires internal expertise |
Strategic benefits of staff augmentation that move the needle for startups
In 2023, 57% of businesses outsourced their IT functions to a tech vendor for a whole lot of different reasons. Around 60% of companies also increased the extent of outsourcing in response to the economic turbulence. So what’s there to staff augmentation that makes so many businesses, including startups, go down the outsourcing path?
Cost-effectiveness
Over 80% of businesses outsource their projects to a tech vendor to reduce costs. While cost-effectiveness is equally important for all companies, it’s a matter of survival for startups. The average cost per hire was around $4,700 a few years ago. In reality, you can pay x3 or x4 times the position’s salary, as some HR experts report.
Attracting temporary talent from a staff augmentation firm located overseas allows startups to slash hiring costs while also obtaining a predictable pricing model that keeps them on budget and helps manage the cash flow. Also, companies only have to cover the daily rate of developers without paying taxes, additional office space rent, health insurance, and other direct or indirect labor costs. With staff augmentation, you only pay for the resources you actually use, avoiding the costs associated with maintaining a large, permanent team.
Faster time to market
When you have hyped-up customers lined up at your door, you need to act fast to adjust and scale your product to the needs of an expanding customer base — unless you want to lose the momentum. By augmenting existing teams with external talent, startups can bring in a concentrated burst of tech talent to double the development speed without affecting product quality.
Compatibility with the market dynamics
It’s never a linear trajectory for emerging companies. Startups often follow a cyclical pattern, alternating between periods of frenetic activity and relative lull. The flexibility provided by staff augmentation helps startups easily scale their workforce up or down based on current demands without being weighed down by the complexity (and cost) of employee hiring and termination. With augmented staff, startups can also pivot quickly, which is vital in this fast-paced environment.
Global reach, local impact
Usually, local talent pools are limited, making startups vie for talent with incumbent companies. It gets even more complicated to secure trending or niche skills. In contrast, skill-based staff augmentation allows companies to tap into a vast talent pool of targeted skills that align directly with the project's requirements and can be hired in a few days, not months. Also, augmentation providers often have a global reach, enabling companies to attract talent from regions and time zones that are compatible with their own locations.
Reduced hiring risks
With traditional hiring, there’s always the possibility of making a bad hire. With an augmented IT workforce, startups can eliminate the risk of committing long-term to the wrong specialist. As most providers offer a trial period, startups can evaluate the performance and cultural fit of the augmented team members before sealing the deal.
Shortfalls of staff augmentation and how to avoid them
Time and language barriers
Managing remote employees from a different cultural or linguistic background requires a learning curve. Asynchronous workflows, language barriers, and misalignment in working practices can hinder effective communication and lead to misinterpretations, which can impact project outcomes.
To mitigate this risk, make sure to select a staff augmentation company whose tech specialists can speak the same language as your team and are located in a country with at least four hours of time overlap. You should also check the team’s English proficiency during one-to-one vetting interviews. To prevent communication gaps, you should set up a calibrated communication workflow supported by unified project management tools to keep everyone on the same page.
At Orangesoft, we've taken multiple steps to mitigate this risk. We’re located in Poland, an established European tech hub that offers a convenient time zone for collaborating with clients from the US, the UK, Germany, and other locations. Our autonomous teams are also made up of tech specialists with a high level of English proficiency to make sure your in-house team and augmented specialists are on the same wavelength.
Security concerns
When engaging external software engineers and other IT specialists, data security becomes an inevitable critical concern. Remote hires often need access to sensitive company data, which increases the risk of unauthorized access or data breaches. Also, differing data privacy laws and data security standards between the company and the external team can expose the former to hefty non-compliance fines.
To get this potential challenge out of the way, it’s essential to choose a software development vendor that complies with international data security standards such as ISO 27001 and has hands-on experience with local/regional and industry regulations such as GDPR, CCPA, HIPAA, PCI DSS, and others.
At our company, we implement data security safeguards by ISO 27001 to ensure the confidentiality, integrity, and availability of your sensitive data. We also sign a non-disclosure agreement to protect the confidential information and intellectual property of our clients. A deep understanding of such regulations as HIPAA, FDA, CCPA, and others allows our developers to innovate while ensuring compliance.
Management overhead
Onboarding and managing augmented employees requires additional effort from the startup’s team and project managers/team leads, in particular. Managers have to set the right context for the augmented specialists, make sure they integrate effectively with the team and achieve specific performance metrics.
To effectively plug the on-demand specialists into the core team, companies need to factor in the associated management overhead and assign a dedicated project manager or team lead to oversee the hires and facilitate their synthesis with the in-house team.
Ramp up your team in 4 simple steps
Since 2011, Orangesoft has been providing IT staff augmentation services to global startups, enabling them to rapidly address talent gaps and bring their products to the market. At our company, you can find experienced web and mobile developers, UI/UX designers, QA engineers, project managers, and business analysts.
Based on our experience, here's what the process of IT staff augmentation looks like:
Reviewing your initial request
When we receive your request for staff augmentation services, our IT managers and business analysts carefully analyze it. Before requesting these services, consider the following questions:
- How many specialists do you need for your staff augmentation project?
- Are you looking for junior, middle, or senior tech specialists?
- When do you need the augmented staff to begin working on your project?
- What is your project's deadline?
- Is it a new or ongoing project?
Our managers need 16 business hours to review your request and outline a tailored team augmentation strategy. Then, we schedule a call with you or your representative to discuss the details.
Choosing the specialists
After we have signed an NDA and reviewed your project's requirements, we begin sourcing specialists with the exact skills and experience needed for your project. You can expect to receive the first CVs within two business days.
Interviewing IT specialists
After you approve the CVs, we arrange interviews with the selected specialists. Usually, such interviews consist of two parts – one with a CTО and the other with a CEO or product owner. You only pay for the professionals you hire, no matter how many candidates you've interviewed.
Signing a contract
Once all the interviews are done and the candidates are approved, we can sign a contract and start our staff augmentation project. Our dedicated account manager provides ongoing support to your team to ensure a smooth collaboration.
Moving from ‘temp’ to ‘team’ with Orangesoft
When increasing workload stretches the in-house tech team to the limit, it might be time to reimagine how work gets done. That was the case for one of our clients, a healthcare company that has a virtual care platform in the works. Initially, the client was looking for three web and six mobile engineers with hands-on experience working with healthcare projects to power up their existing development team.
The client's satisfaction with our work led to an extension of the project and an increase in the number of specialists involved. Working alongside the client’s in-house team for over a year, our augmented developers helped the company deliver a three-sided healthcare solution on time and according to the predefined requirements.
Contact us to learn more about our staff augmentation services, and our experts will help you find the right solution for your business.