Staff Augmentation vs Project Outsourcing – What’s The Best Option?

If your company is like most in today’s marketplace environment, keeping up with your competition requires ongoing digital innovation in the products and services you offer, or at the very least, in your internal operations. That’s why you’ve identified one or more software development projects that are important to your company’s future. However, the problem you face is that your company doesn’t currently have access to the software engineering talent required to bring those projects to fruition successfully.

Perhaps your in-house development teams don’t have all the skills and experience your projects require. Or it could be that while you have the expertise you need, you simply don’t have enough skilled workers to get the job done in the necessary time frame.

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Whatever the reason, you need help. And not just any support. You need workers with the specific skills, training, and experience required to do the job. The question is, what’s the most cost-effective way to get them?

How To Get The Skilled Workers You Need

You basically have three choices. The first is the traditional route of simply going out into the job market and hiring the workers you require. But in today’s environment, that can be problematic. The U.S. is currently experiencing a software developer shortfall of almost half a million unfilled positions. That excess of demand over supply means that software engineers are typically hard to find (on average it now takes 39 days to identify, vet, and onboard a software engineer), expensive to hire (the average yearly salary for a software engineer today is $109,063, plus a $4000 cash bonus), and difficult to keep (for many corporate recruiters, poaching software developers from other companies is a prime recruitment strategy).

For these reasons, or perhaps because you will need the extra help only for a particular project and don’t want to bring on board new permanent employees, you may not want to go to the hiring market to meet your staffing needs. If that’s the case, you are left with two major alternatives: staff augmentation or project outsourcing. In this article, we’ll take a look at the pros and cons of each, and how to decide which is best for your business.

What Is Staff Augmentation?

Staff augmentation is the process of adding temporary contract employees to your permanent staff. In other words, with staff augmentation, you hire one or more workers, temporarily, to join your project team for just the time they are needed to complete the project.

Ideally, these temporary additions to your staff come pre-equipped with the skills and training they need to make them productive from day one. You integrate them into “your” project team and supervise their activities, just as if they were permanent employees. When they are no longer needed, they simply leave, without you having to go through the process of laying them off.

These temporary workers are typically obtained through a professional staff augmentation company. Such firms maintain a database of highly skilled experts they can call on to fulfill the requirements you specify. The staffing company employs them and handles all aspects of hiring, screening, and paying them. You simply identify the particular skills and other characteristics you need, and the staff augmentation provider will offer you contract workers who meet those requirements. In the rare instances where a worker turns out to not be a good fit, a top-notch staff augmentation provider can usually quickly offer a well-qualified replacement.

The staff augmentation model’s essence is that the deliverable you receive from the provider is a set of qualified professionals who are temporarily added to your team. But you continue to be responsible for directing and overseeing the team and meeting project goals.

What Is Project Outsourcing?

With the project outsourcing (or managed IT services) model, the staffing provider assembles a team and executes the entire project (or a specified subcomponent of the overall project). The deliverable is not workers, but a set of designated project outcomes, usually specified in a service level agreement (SLA). Whereas with staff augmentation, you remain responsible for ensuring that the project meets its defined goals, with project outsourcing you hand over that responsibility to the staffing provider.

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Pros and Cons of Each Model

Both staff augmentation and project outsourcing have specific advantages and disadvantages that are important to understand if you are to make a well-informed decision about which is best for you. So, let’s take a quick look at the pros and cons of each.

Advantages Common To Both Approaches

• Lower staffing costs: Because the staffing provider employs the developers needed to fill out your project teams, you are relieved of the responsibility, and the costs, of finding, vetting, and hiring those workers. The staffing company also assumes responsibility for handling administrative responsibilities such as payroll, benefits, etc.
• Reduced wage and benefits costs: With offshore or nearshore staffing, the contractors assigned to your project teams work remotely from other countries that have lower pay scales than in the U.S.
• Access to higher skill levels: Because the staffing company is normally a specialist in identifying and retaining the best software engineering talent available, it will typically have access to experts with specialized technical skills that your company might have difficulty attracting on its own.

Pros of Staff Augmentation

• Control: With staff augmentation, you retain full control of your project. Responsibility for the day-to-day management of the team, and for the results produced, remains in your hands. You have direct insight into project status, and can quickly make any needed course corrections as issues arise or if the needs of your company change.
• Staffing flexibility: You can adjust staffing levels as needed. If, for example, you need to add workers with specific skills to keep the project on schedule, you can usually do so quickly and easily.
• Staffing stability: In today’s environment, it’s not uncommon for software developers to be lured away by attractive offers from other companies. But with staff augmentation, if a team member leaves, whether it’s one supplied by the staffing company or one of your permanent employees, a good provider can usually supply a replacement much more quickly than if you had to go out and hire one.
• Skills upgrades: Staff augmentation can help you upgrade the skills of your in-house workforce. By carefully structuring the working environment, you can ensure that knowledge transfers between contract workers and your permanent employees occur as a natural consequence of your development process.

Cons of Staff Augmentation

• Results depend on you: In the staff augmentation model, the staffing company bears no responsibility for project results. Its only deliverable is a specified number of hours worked under your supervision by the contract employees it provides. Your management team retains full responsibility for ensuring that the project meets its goals.
• Need for more supervision: Staff augmentation requires a greater degree of management focus and involvement than does project outsourcing. Your management team must provide day-to-day direction to workers so that the project is kept on track and reaches a successful conclusion. Because contract employees are essentially being paid for the hours they put in, your project manager or team leads must have both the technical and supervisory skills to provide effective oversight to ensure that remote workers stay focused on meeting project goals.
• Potential communication difficulties: The need for frequent and effective communication with team members who work remotely from another country could give rise to difficulties caused by differences in language and culture. Ensuring that such issues won’t disrupt your project should be a prime consideration when selecting a staff augmentation provider.

Pros of Project Outsourcing

• Freedom to focus on business goals: Because the outsourcing company is responsible for managing the project and delivering results that meet the requirements of the SLA, you can focus on executing your marketplace strategy rather than on running technology projects that may not directly relate to your core business. The level of technical expertise and day-to-day supervision required of your company’s management team is much lower than with staff augmentation.
• Lower risk: Because of the penalties that would be triggered by the failure of the outsourcing company to meet the requirements of the SLA, they effectively take on a portion of the risk if the project does not produce the specified results on time and within budget.

Cons of Project Outsourcing

• Potential for “mission creep”: Although your management team may not be technically skilled, they still must understand enough of the software development process to specify in the SLA the exact deliverables you require, along with relevant time, budget, and quality constraints. If this is not done well, you may find yourself having to change the scope of work as the project progresses, which can be expensive in both time and money. Also, since an outsourcing contractor will normally be servicing other clients at the same time, it may be difficult for them to quickly change direction or devote added resources to meet your updated needs.
• Lack of control over code quality: With an outsourced software project, you have less control over (and insight into) the quality of the code produced. If you are not sufficiently precise in defining your deliverables, you might get a product that seemingly meets all SLA requirements, but which, because of the coding style or external dependencies, may be very difficult for others to maintain or upgrade. In fact, if you’re not careful about the coding standards and documentation you require, you could find yourself locked into that contractor for maintenance and upgrades because no one else can unravel the code.
• Possible legal or regulatory exposures: Your company could be held liable if your outsourcing contractor fails to adhere to regulatory requirements such as the European Union’s General Data Protection Regulation (GDPR) or the new California Consumer Privacy Act (CCPA).
• Loss of control over project outcomes: For projects that are critical to the future of your company, you are to a degree putting your fate into the hands of your outsourcing partner. Although there may be penalties for failure to meet SLA requirements, the marketplace will exact its own penalty on your company for falling behind competitors in the product features or services you are able to offer customers. Further, if the contractor should experience their own operating difficulties, or even go out of business before completion of your project, you could find yourself having to restart from scratch. This is less likely to be the case with staff augmentation since you control the project. Even if a key worker were to quit, or if the contractor should fail, you wouldn’t lose the intellectual capital the project has developed.

Which Approach Is Best For Your Business?

If your company doesn’t have the technical expertise to manage a complex software development project, or if your management team would simply prefer to focus on meeting business goals rather than on running technical projects, outsourcing will probably be your best option. This is especially the case if your software development efforts mainly support internal or customer-facing business operations rather than producing the actual products or services you offer to customers.

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If, on the other hand, you’re confident in your team’s ability to manage the software development process, but simply need more workers or specific skills not currently available in house, staff augmentation will probably suit your needs best.

Let ParallelStaff Help You Get Started

Whether you decide that your company’s needs can best be met by staff augmentation or project outsourcing, we can help. ParallelStaff is a U.S. based global business process outsourcing provider. We offer staff augmentation and software development services utilizing a cadre of highly skilled software engineering contract employees who work remotely from Mexico and Latin America. Our experienced, English-speaking, culturally-attuned professionals are available for all major software engineering specialties. In addition, we can supply proven project managers who deliver the results you want at a fraction of the cost of trying to do it all yourself.

By partnering with ParallelStaff to assemble the software development teams you need for the digital transformation projects that are so vital to your company’s future, you’ll take the struggle out of the staffing process. And the time and money you would otherwise have to spend on recruitment can be redirected to efforts that make a more direct contribution to meeting your business goals.

If you’d like to know more about how ParallelStaff can help your company build successful and cost effective software development teams, please contact us.