Unlocking Success Through a Staff Augmentation Model: Insights from an Expert
Staff augmentation has become a global phenomenon that unites tech talent and businesses from all corners of the world. However, despite its common adoption, there are still companies venturing into this model, which is why we’ve decided to conduct this interview. Together with our Head of Business Development, Dmytro Malashevskyi, we’ll explore the ins and outs of the staff augmentation model. We’ll focus on its benefits compared to traditional in-house hiring, dive into the best practices for selecting a provider, potential challenges, and strategies to maintain effective communication and company culture and much more. So, if you’ve been curious about the inner workings of this model, read on!
Can you briefly define what a staff augmentation model is, and why it has become increasingly popular in modern software development?
A staff augmentation model has been around for a while, and not just in the field of IT. However, it’s within software development that it has evolved into a thriving global business and a colossal industry, ranking in billions of millions of dollars each year.
Why did the model rise to fame? Simply because there weren’t enough technologists available locally. The demand for software developers in the United States and Western Europe was way more than local pools of talent could cover. So, entire markets of staff augmentation solutions have sprouted up, mainly in developing countries, where talented individuals with a strong educational background were up to tackle those needs.
In general, Southeast Asia is the biggest player in the staff augmentation market, with India the Philippines, and Pakistani taking the lead. Eastern Europe is their most formidable competitor – the region has a reputation for generating top-notch professionals who tend to think outside the box. Also, Latin America is gaining ground thanks to time zone similarity, which enables engineers to work hand in hand with teams based in the US.
Overall, in recent years, the staff augmentation model has skyrocketed and isn’t stopping any time soon. In the US, businesses are looking at a shortage of 4 million developers by 2030. For sure, a staff augmentation company strategy will come to the rescue.
What are the key benefits of staff augmentation solutions, as opposed to in-house hiring?
Above all, access to tech talent. Companies don’t turn to staff augmentation solutions because it’s a popular thing to do. It’s usually due to a necessity to fuel rapid business growth. The beauty of this model is that it opens up a treasure trove of talent. You’re not stuck with the local pools of tech talent – you can source developers with diverse skills and niche expertise from a global pool of talent.
Secondly, continuous coding. Imagine: Your team in the US finalizes their working day, and then your team in Eastern Europe takes over. Next, your team in Asia picks up the slack. Think about the global E-commerce giants, the companies that can’t afford a minute of downtime, and projects that need constant support and ongoing work. Staff augmentation solutions can keep such projects running 24/7.
Thirdly, the cost. While it’s not always the prime factor, it still matters. Hiring developers in Latin America or Eastern Europe will be 2.5-4 times cheaper than in the United States, and even more affordable in Asia. The staff augmentation model helps businesses cut costs significantly – with the budget for a local team, you can hire more developers and complete your project faster or more affordably.
Finally, simpler hiring. Ramping up and scaling down the team on the staff augmentation model is much easier from a legal perspective, as it’s contract work. This is especially relevant for projects with strict deadlines. If you have a year to get a side project off the ground, you don’t need to build a permanent team. You can just go with staff augmentation solutions for that timeframe and then disband the squad without any trouble or continue building in case of success.
What should organizations consider when deciding between in-house software engineers and staff augmentation solutions?
Consider your budget as your first step. Would you be able to afford to build an in-house team of the right size and expertise in your location? If yes, going for an in-house unit makes perfect sense.
Another question is whether software development is your core business. For those companies where software development isn’t their expertise, it may be best to opt for staff augmentation solutions. The reason for it isn’t always saving money or finding the right talent – it’s more about competing for talent. In the US market, you often have to compete with tech giants like Amazon, Google, Apple, or Facebook. Top-notch developers aren’t eager to join projects where they’ll be the only developers because it can limit their professional growth. In a staff augmentation model, these developers usually belong to a company with a larger tech community, making it easier to recruit and retain them effectively.
Another important question to ask yourself is, can you handle cultural differences? Software developers from Eastern Europe typically have a lot in common with Western Europeans and Americans when it comes to culture. LATAM developers have a lot of experience working with North American businesses, so they are culturally aligned as well. But when it comes to developers from Asia, there can be more noticeable differences. For example, team members might follow a “yes-culture” where they agree to everything to avoid upsetting the client, even if it makes it tough to meet deadlines and deliver on promises.
Lastly, the longevity of the project. How long do you need a team for? Is it a project for 1-2 years like an MVP or a PoC – something you’re not sure if it’s going to find its market? In such scenarios, it makes sense to go with the staff augmentation model. If your idea turns out to have legs, you can always expand that team. But if things don’t go as expected, you can easily wind down the development and part ways with the squad.
Can you share some staff augmentation best practices for selecting the right provider?
In today’s market, thousands of providers are vying for your attention. So, it can be challenging to figure out which one suits you best. Almost every one of them has great reviews. Moreover, the prices for staff augmentation solutions are similar across regions. That said, I’d recommend focusing on providers’ experience, narrowing your list down to ones that have been in the market for a while.
Next, consider companies that already have experience with the technologies you’re looking for. Find and focus on providers who know the ins and outs of your industry. This might not be a deal-breaker in the US, but it’s important to know that the provider you choose can match you with the right kind of specialists – as they did for other companies with similar needs.
When it comes to staff augmentation best practices, here’s a tip: Choose a provider based on the quality of its HR and Recruitment team. After all, the staff augmentation model is about building a strong and productive branch. The provider’s HR unit is a critical building block in making that happen. Unfortunately, many companies overlook this as one of the factors in their selection process.
In what scenarios is staff augmentation company strategy particularly advantageous?
As I mentioned, the staff augmentation model shines for businesses that don’t have their own in-house IT crews. Building one can be costly, and it’s not simple. You’d have to find specialized IT recruiters and specialists to make sure candidates have the right skills, and then keep an eye on the engineer’s performance. For companies not in the software business, a staff augmentation company strategy offers a straightforward and cost-effective way to meet their development needs.
Staff augmentation solutions can also be a lifesaver for companies and startups with tight budgets. When funds are limited, turning to these services can help you manage your budget more safely and steer clear of unexpected financial challenges. This is especially useful for businesses with temporary projects that last up to 2-3 years.
When the staff augmentation model might not be the ideal approach?
Let’s say, you’re a software development company or a startup that builds software. Giving the provider of staff augmentation solutions the entire expertise and know-how may not be the wisest solution. While you’ll have ownership and intellectual property rights all sorted out in the contract, key individuals may leave the project or the provider may reassign them to other projects. It can impose risks. So, it’s better to sign a contract for dedicated developers in situations like this. That way, you’ve got a guarantee they’ll stay laser-focused on your project.
Also, in scenarios where you’re dealing with tight deadlines and your team is scattered across different time zones. Some of your team members are in California, while others are based in India. That significant time difference can lead to your remote team feeling a bit disconnected during the development process. It’s a big deal for startups that are evolving rapidly and need to touch base every day, making the staff augmentation model a less suitable choice.
How can organizations maintain effective communication and collaboration between their in-house teams and staff augmentation resources, especially if they are working remotely or in different locations?
Well, this question is quite straightforward. If you are already rocking communication with your current remote team, you’ll find it works just the same with developers under a staff augmentation model. A well-structured staff augmentation process involves smoothly fitting these developers into your existing workflows. They will essentially become your team members, except they’ll be on the payroll of the provider. Think of it as an extension of your existing team – that’s why they call it “augmentation,” right? When the process is set up properly, it feels more like a natural team extension, rather than bringing in some alien entity to your company.
What are some staff augmentation best practices when it comes to maintaining company culture within a remote environment?
Culture always starts at the top – from the owner, CEO, or HR director and trickles down from top to bottom. Maintaining and creating this culture can be challenging, especially when you’ve got team members scattered all over the world.
There are some downsides to this setup, the main one being people not feeling connected to the company vibe. In other words, it’s key to eliminate that outsider feeling of your remote team member. In this case, a staff augmentation model can come to the rescue. A solid provider can create processes that help individuals feel like a full-fledged part of the team, vibing with the client’s culture. It’s a challenge because each person technically works for the provider, but they have to integrate into the client’s project and soak up the client’s culture. So, a lot depends on the engineering manager and project manager on the client’s side to make things click.
Are there any potential challenges or pitfalls that organizations should be aware of when implementing a staff augmentation company strategy, and how can they mitigate these risks?
Firstly, the number of providers. In large companies, they can stretch into dozens. Handling a bunch of them can be a real headache – meaning tons of contracts, subordinates, and paperwork. That’s why I’d recommend consolidating your vendors of staff augmentation solutions. If you’re a large company, stick to no more than two providers per region to keep the chaos at bay.
Also, it’s crucial to treat developers you hired through the provider just like your in-house team in terms of workload and interaction. Even though they aren’t your direct employees, they play a significant role in your projects. Losing someone due to interpersonal issues or mismanagement can be costly. It not only means finding a replacement but also dealing with the learning curve for a new team member. In the long run, maintaining good relationships and retaining talent is often more cost-effective.
When it comes to pitfalls, some clients, after hiring a developer at a certain rate, expect that rate to remain fixed. But the deal is that developers level up professionally. After a year or so, they might want a salary review, just like your regular employees. Sometimes, clients don’t see it coming and end up losing valuable team members. Like I said earlier, it’s crucial to treat your remote developers as your internal staff.
What are your recommendations for someone just starting with the staff augmentation model?
Take your time. If you want to figure out if the staff augmentation model fits your company, kicking off with a contract for just one developer may be a good strategy. That way, you can take your provider for a spin and assess everything carefully – from the efficiency of the hiring process and the quality of candidates provided to how well the communication works. Starting small like this can help you minimize risks and get a better sense of whether that particular provider suits you. Alternatively, you can start with several providers and then choose one later, after, let’s say three months.
Also, don’t expect to hire a great developer for a low fee, especially if you’re looking at staff augmentation solutions in Eastern Europe or Asia. Talented developers with decent English skills are active in the global job market. With their skills, they can find employment opportunities worldwide. So, expecting staff augmentation to be drastically cheaper wouldn’t be realistic.
Finally, before you start looking for a provider, take a moment to check if your processes for working with remote developers are in good shape. During the pandemic, many companies have adapted to remote work. Some have gone fully remote. If you’re one of those companies, it shouldn’t be a major roadblock. However, if you’re a proponent of traditional office work, you’ll need a set of processes and tools to efficiently manage your team in a remote setup.
If you have any questions left, don’t hesitate to contact our team at nCube. Our experts in staff augmentation company strategy will be more than happy to consult you on this model.