How to reduce business costs with IT staff augmentation

In 2023, 61% of tech leaders in the US expected to cut their hiring costs. Nothing groundbreaking, since the traditional hiring process can be both time-consuming and costly. The average cost of hiring a new employee can exceed USD 4,000. And this is only the money dimension. What if we calculate an average time-to-hire? On average, companies in the US spend 44 days to fill a position. And that’s while demand far exceeds the offer.

A very straightforward inference — businesses need more flexible and efficient staffing solutions. There is one — IT staff augmentation, a strategic approach that allows businesses to dynamically scale their IT workforce in response to project demands and technological advancements. Staff augmentation provides access to a global talent pool of specialized talent, offering the agility to quickly adapt to market changes without the long-term commitments and costs associated with full-time hires.

Imagine you have a small renovation company, and to complete a project, you need skilled pros like electricians or plumbers. As long as you have a contract for only one house, you don’t need to hire all those professionals for a long time. Similarly, a CTO might opt for staff augmentation to bring in specific IT skills when needed.

With staff augmentation service, you temporarily enhance your tech teams with specialized pros, addressing specific project needs or skill gaps without the long-term commitments associated with traditional hiring processes.

Through the lens of strategic flexibility, access to specialized skills, and the ability to rapidly adapt to technological advances, staff augmentation presents a compelling opportunity for cost optimization in our unstable times.

Traditional IT staffing vs. staff augmentation

Creating a robust internal IT team has been a typical go-to strategy for a long time. Without alternatives. How do we see it today?

• Recruitment: Advertising open vacancies, screening resumes, and conducting interviews. This can be time-consuming since 100+ applications are received for each vacancy on average.
• Salaries and Benefits: When you hire full-time employees, be ready to spend more: salaries, bonuses, payroll taxes, health insurance, and other benefits.
• Training and Development: You need skilled team members with expertise in cutting-edge technologies. This requires investments in training programs and certifications.

On the one hand, with a full-time IT staff, you get stability while your team gains deep knowledge of your company's specific systems. But on the other hand, the associated costs can be significant, especially for mid-sized businesses.

But let's compare this traditional staffing model with the staff augmentation approach.

As you see, staff augmentation services present a compelling alternative that prioritizes flexibility and cost-effectiveness. Why? Because of these points:

• Access to specialists with specific skill sets needed for a particular project.
• Easy adjustment of your IT team size and composition based on project requirements.
• Reduced expenses as you don’t need to pay for benefits and office space.

Cost-saving advantages of staff augmentation

There are many OSINT techniques and AI tools for HR managers. Nothing groundbreaking, since the recruiting and hiring processes can be money-draining. The survey conducted by the Society for Human Resource Management indicates that the average cost-per-hire in the United States can reach USD 4,700. Despite it encompassing advertising, screening, and interviewing expenses, the amount remains significant.

So, it’s not surprising that 61% of tech leaders planned to decrease hiring costs in 2023. On the flip side, without highly skilled employees, any business risks falling behind. However, when there is a will, there is a way. IT staff augmentation companies bring about cost savings, especially if you belong to an SME.

Streamlined hiring: When it comes to hiring, you’ll encounter recruitment fees, onboarding expenses, and productivity losses as new employees ramp up. Also, onboarding a new employee can include expenses for setup, training, and potentially travel or relocation. For example, training and support alone usually cost about USD 1,200 per employee. Compared to this, IT staff augmentation lets you avoid many of these expenses — you pay only for the services of particular IT specialists and only when you need them.

Spending only on targeted expertise: Businesses can precisely match their resource input with project needs, avoiding the financial commitment of ongoing salaries, benefits, and perks associated with full-time employees.

Finding like-minded pros: Such an approach opens the door to a global talent pool. You can find pros with appropriate skill sets at an affordable rate.

Reduced overhead costs: Full-time employees require workspace, equipment, and possibly additional software licenses or subscriptions. Specialists provided by staff augmentation companies typically come equipped with their own tools. No need to extend office space, no need to cover subscriptions, etc.

Increased project efficiency: One of the most significant advantages of IT staff augmentation services is the adaptation speed. Traditional hiring can lead to a productivity gap. To be more down to earth, it may take from 8 to 26 weeks for a new hire to achieve full productivity. With staff augmentation services, you can fill skill gaps quickly, accelerating project timelines and avoiding delays.

Implementing staff augmentation for cost reduction

Seamless integration of external talents into existing teams and projects could be a pain in the… neck. Here’s how to make it smooth:

#1 Clarify project needs & skills needed

Any endeavor starts with a thorough assessment. Examine your requirements and identify the specific skills or expertise that your team currently lacks. Technical capabilities, project management experience, or niche knowledge crucial for the project's success — whatever.

#2 Partner with a reliable staff augmentation service provider

The right choice could be tricky. Hardly can you understand whether your partner ticks all the boxes before 20% of the project is done. At first glance, any provider could be a golden choice. But then… So, look for providers with a proven track record, a robust talent network, and the ability to understand and meet your specific needs. Their vetting process, responsiveness, and flexibility are the key indicators of service quality.

#3 Clear communication & defined scope

Effective communication is king. Many use comms tools like Slack, Microsoft Teams, and Zoom to ensure seamless interaction between their in-house and external team members. Consider different options, carefully studying the provided features and price policy.

To correctly define the project scope, have a look at SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goal setting and the MoSCoW method (Must have, Should have, Could have, Won't have this time) — they can provide clarity and focus.

There are two additional frameworks for scope determination:

1. Work breakdown structure (WBS): Simply put, it’s just breaking down a project into smaller, manageable deliverables. A WBS creates a clear roadmap for both your internal team and the augmented staff.

2. User story mapping: This agile framework focuses on user needs and prioritizes features from users’ perspective. It helps ensure that external resources are focused on delivering the functionalities of the highest value for your project.

#4 Monitor performance

The good tone is to have clear performance metrics and regular check-ins to monitor the contribution of external staff to a project. Without pressure, of course. But this move significantly helps identify areas for improvement or adjustment in your mixed team.

#5 Integration & onboarding

Develop an integration plan that facilitates the smooth entry of external staff into your team. This includes access to necessary tools, an introduction to other team members, and a clear explanation of company culture and project objectives. Effective onboarding ensures that external professionals can quickly become productive members of the team.

#6 Legal & compliance check

Thoroughly review all contractual and legal aspects of the staff augmentation arrangement to guarantee compliance with industry standards and regulations. This step protects both parties and ensures a clear understanding of responsibilities, confidentiality agreements, and intellectual property rights.

#7 Offboarding & transition

When all tasks are completed, it’s time to say goodbye. Develop a clear offboarding plan to dismiss external talent once a project is over or the specific skill set is no longer required. Ideally, ensure comprehensive knowledge transfer to your internal team and a smooth transition.

Common IT staff augmentation myths debunked

Staff augmentation offers a compelling solution for many businesses. But some lingering misconceptions still remain.

Myth #1: Staff augmentation is a budget-buster

Reality: This staffing strategy is more cost-effective than you could expect. What is staff augmentation in general? It’s the engagement of a fully equipped IT specialist(s) ready to hit the ground running. In other words, you bring in the experts you need for a particular period, avoiding the long-term financial commitments associated with usual employment. This model offers the flexibility to scale operations up or down based on project requirements.

Myth #2: Second-rate skills, second-rate results

Many people believe that the caliber of talent available through staff augmentation doesn't match that of internal hires.

Reality: In practice, staff augmentation services often provide affordable access to a global pool of highly skilled and specialized professionals. Providers of staff augmentation services spend time and money to vet these specialists. One more time: not you, but they spend.

Myth #3: Communication biases

There is a widely spread bias about maintaining communication with external specialists. A lot of CEOs and CTOs believe that this is indeed pretty difficult.

Reality: Today, there is an abundance of advanced technologies that facilitate remote work and ensure seamless collaboration across geographies. Slack, Microsoft Teams, and Zoom are just a few to name. Coupled with project management software, they ensure the close work of your external specialists with in-house teams.

Myth #4: Staff augmentation brings about security breaches

Security is king. When it comes to staff augmentation, the risk of data security concerns rises. Or not?

Reality: Definitely not. But only if your partner has solid security measures in place and allows you to double-check them. Strict data security protocols and compliance with relevant regulations are the most obvious signs. Moreover, top-notch staff augmentation companies can even tip you off regarding some security risks throughout the project. Additionally, external staff typically sign confidentiality and data protection agreements.

Myth #5: Cost savings are the only advantage of staff augmentation

Reality: Cost reduction is a significant benefit. Yet, staff augmentation also offers flexibility, access to specialized skills, and the ability to quickly respond to new market demands. Time to market can shrink significantly with the talents and flexibility that staff augmentation companies offer.

Takeaway

Staff augmentation services are not a one-size-fits-all solution. It is not tactical but rather a strategic move. Nevertheless, for many mid-sized businesses, it presents an opportunity to optimize IT resources, achieve cost-efficiency, and propel business growth.

IT staff augmentation companies offer more than just cost savings:

• Bringing in the right skills at the right time to quickly implement technological advancements and swiftly adapt to changing market demands.
• An opportunity to drive innovation through diverse perspectives and expertise from across the globe.
• Operational agility that makes it possible to pivot strategies without the constraints of a fixed workforce.

One more caution is that, if we take a look at the age groups of 16-24 (the historical entry-level talent pool) and 45-54 (the historical leadership talent pool), we’ll notice that the labor force shrank from 2010 to 2020. And this problem hasn’t been caused by the pandemic.

These statistics shed light on the importance of a skilled workforce, and IT staff augmentation offers it. Consulting with staff augmentation companies can also illuminate the specific advantages and reveal implementation strategies that align with your business objectives.

You can get more details and test the waters in a free meeting with the Devico experts.