In the IT industry, outsourcing is used more and more often – according to the results of the “Global outsourcing survey 2022”, conducted by Deloitte, as many as 72% of the surveyed companies outsource their IT work, and 31% plan to increase the scale of outsourcing in the future.
Despite the popularity of outsourcing, there are still companies that, for various reasons, are not convinced about this form of cooperation with a software house. For them, we have prepared a series of articles describing in detail various outsourcing models used in the IT industry, their advantages and disadvantages, and the scale of savings possible to achieve thanks to them.
Introduction – types of IT outsourcing services
In our series of articles devoted to outsourcing in the IT industry, we will try to answer the most important questions that often appeared in conversations with our Clients.
We will explain not only what types of outsourcing services are offered by a software house such as SOFTIQ, but also what are their pros, cons and scale of possible savings.
In our articles, we will characterise following types of outsourcing services:
- Project-based outsourcing.
- Dedicated teams.
- Managed teams.
- Team augmentation / staff augmentation.
In this article, we will focus on the outsourcing of IT specialists in the team augmentation / staff augmentation model.
This option is often used by companies that try outsourcing for the first time. As cooperation can start from outsourcing even one specialist, the company can assess how augmentation model will work in their particular case, and also get to know the software house better.
If results are satysfying such test can be the beginning of many years of cooperation between companies, and over time the scope of outsourcing services can be broader.
So what exactly is team augmentation / staff augmentation?
What characterizes the outsourcing of teams and IT specialists in the team augmentation / staff augmentation formula?
Outsourcing of teams and IT specialists in augmentation model means acquiring one, two or more specialists who can join your project as part of an internal team. They bring their skills, knowledge and experience from numerous projects that they have worked on as part of a team in a software house.
This outsourcing variant is also called staff extension / team extension.
What is characteristic for outsourcing teams and IT specialists in the team augmentation / staff augmentation model?
- Specialist provided by the software house works with your company’s internal team, bringing on board specific skills needed to finish your project.
- In the team augmentation / staff augmentation formula, you manage the work of the acquired specialists, because they become a part of your team.
- A software house can support you in management to some extent, but the responsibility for the success or failure of the project is on your side.
- Team augmentation/staff augmentation is very similar to temporary employment of additional specialists, because you have the option of choosing specific people with specific skills that you need most.
- If during the works on the project you will have a need to recruit another specialist for a short period of time, you can quickly do it in the same model by with the same software house.
- Specialists are not dedicated only to your project, but at the same time they can be involved in other tasks for other Clients.
When you decide to use augmentation / extension model for outsourcing, you have more control over your project, thanks to close cooperation between the internal team and external specialists.
At the same time, you do not have to worry about the costs of recruiting an employee who is most often needed for specific tasks that are not related to the core business of your company, like filling the gap in skills for the specific project.
What are the advantages of outsourcing IT teams and specialists
Most frequently mentioned benefits of outsourcing in the team augmentation / staff augmentation model are savings of time and money which your company would have to spend on recruiting an internal employee.
Because of that, team extension / augmentation for many companies is the most optimal way to quickly acquire an IT specialist.
At the same time, with the possibility of choosing a person with specific skills, you will be sure that you will get competences that are needed in your project.
However, these are not all the benefits of using this form of team expansion.
The main advantages of outsourcing in the team / staff extension model include:
- Ability to flexibly scale the number of outsourced specialists, depending on changing needs, without having to employ them in the company.
- Savings on administrative costs, as specialists are employed by the software house
- Avoiding the need to recruit specialists with specific skills, often specialized in less popular technologies. In addition to saving time, this also means a seriouse reduction in the number of tasks assigned to the HR department.
- Saving time that needs to be spent on training and onboarding new employees, thanks to which the efficiency of work on the project increases.
- Fast (sometimes almost immediate) start of work by specialists delivered by the software house, which allows you to quickly react when it is necessary to speed up work on the project.
- Flexibility in increasing or decreasing the number of programmers acquired, depending on current needs.
- Thanks to the predetermined amount which you will be paying monthly (or in fixed price model) for additional, you can plan expenses within the project budget well in advance.
- Most of the project management is on your side, so you can maintain proper control over the progress of the work.
- The company is not limited by the need to find a specialist in the same or a neighboring city who will work directly at the company’s headquarters. With the possibility of remote work, you can start cooperation with a software house operating in any location.
- By using outsourced IT teams and specialists, you can speed up the delivery of the project. This eliminates the risk of delays when only your own team would be working on the product.
- Unlike classic outsourcing, project supervision is on the client’s side, with the support of a software house. Thanks to this, you can be sure that the work goes in the direction and pace that is most optimal for you.
- The involvement of external specialists allows for a fresh look at the processes in the company, and in many cases it is possible to see opportunities to improve their efficiency.
Thanks to the experience gained in many projects, in SOFTIQ know that finding the right specialists to hire in-house can often be problematic, and you can have a problem to build an effective internal project team.
When your team lacks specific competencies, and there is a risk of failing to meet the deadlines, classic recruitment of an employee might not be a preferred option, as it can take up to several months.
Cooperation with the software house and using specialists employed there allows you to start using their skills within a few days, or a maximum of weeks.
Despite the undoubted advantages of outsourcing in the team / staff extension model, when you have to choose a model of cooperation with a software house, you also should remember that it has alsoseveral disadvantages.
What are the disadvantages of outsourcing IT teams and IT specialists in the team augmentation / staff augmentation model?
When you use outsourcing in the team augmentation / extension formula, it is important to properly manage the cooperation of specialists employed ith the staff provided by the software house.
If project management is not effective, there is a risk of increasing the costs of the project and distracting your internal employees from their main tasks, important to proper functioning of the company.
Disadvantages of outsourcing in the team augmentation / staff augmentation model that are most often mentioned include:
- the inability to completely avoid training costs – while traditional onboarding is not necessary, as is the case with in-house personnel, it is impossible to omit the basic intrining of external specialists, to introduce them to the processes specific for your company, as well as internal procedures and tools used by your enterprise,
- IT specialists or teams provided by the software house as part of the staff/team extension are not dedicated only to your project, which means there is a risk of reduced responsibility and transparency in this outsourcing model,
- the need for close cooperation between in-house employees and external specialists, which may result in distracting your specialists from their main tasks, especially when the company lacks a dedicated person to coordinate this cooperation,
- if the number of tasks within other projects, in which outsourced specialists are involved, increases, there is a risk of delaying work in your project, which may ultimately affect the quality of the developed solution,
- if you decide to cooperate with a partner from abroad, there may be cultural or language differences that result in communication problems,
- remote cooperation with additional specialists requires more online meetings, as well as sometimes direct workshops, to ensure efficient exchange of information both with the internal team and with staff provided by the software house.
Only by knowing the advantages and disadvantages of IT outsourcing in the team augmentation / staff augmentation model, you are able to carefully analyze the needs of your company and decide, whether this form of outsourcing is the most optimal for you.
When the outsourcing of IT teams and specialists in the extension / augmentation model is most effective?
Below you will find some tips that will help you assess whether outsourcing IT teams and specialists in the team augmentation / staff augmentation formula is right for your project.
Extension / augmentation model is a good choice when:
- you need to quickly fill the gap in your team’s skills, especially when it is a one-off situation and hiring an in-house specialist is suboptimal,
- you have a problem with meeting deadlines in the project schedule, because of a lot of overdue tasks in the project that the core team is unable to complete,
- the project lasts relatively short, so the involvement of bigger, dedicated team is not justified.
We are aware that, especially in the case of companies that want to use outsourcing for the first time, it may be difficult to choose the most optimal model of cooperation with a software house.
In case of some projects, the best solution may be to transfer all the work to an external partner as part of project-based outsourcing or to choose a dedicated team.
If you have doubts which of the outsourcing models will be the most beneficial for your company, feel free to contact our consultants who will help you with professional advice.
What you should look for when choosing a software house for outsourcing?
If you decide that outsourcing of IT teams and specialists in the extension / augmentation model is the best solution for your project, there is still the matter of choosing a partner who will provide you with the right staff.
What you should consider, when choosing a partner for cooperation?
- Experience – the number of completed projects should be one of the criteria for choosing a software house. The greater the practice, the greater the chance of success of your project. It would be a good idea to check portfolio of the software house and ask them about outsourcing services which they provide to other companies.
- Transparent rules of cooperation – from the very beginning, the software house should give you a precise and clear offer, responding to your inquiries and dispelling any doubts. Thanks to this, you can be sure that they show an individual approach to your inquiry and have also your interest in mind.
- The method of recruiting specialists – since the outsourced staff will work with your team and will have an impact on the quality of work, it is worth to find out how software house recruited them. It is good to ask about the recruitment criteria, additional training that the employees have already completed while being part of the team in the software house, and the certificates they have.
Remember that the more questions you ask before starting cooperation with a software house, the better you will get to know your future partner and you will be sure that they will be able to provide you with the right specialists at a good price, and support you in managing them.
What are costs of outsourcing IT teams and specialists?
Outsourcing in the team augmentation / staff augmentation model is cost-effective because, as a Client, you do not directly have to cover the costs of salaries and additional benefits paid to external team members.
In case of outsourcing, you pay an hourly rate or a fixed price, where the team’s work within the entire project is priced.
For each project, the cost of outsourcing in the team extension / staff extension model will be different, because the scope of work and the number of specialists will be individually tailored to the needs your project.
However, a comparison of the costs of employing in-house and outsourcing specialists, published by Accelerance in the report “2022 Global Software Outsourcing Trends and Rates Guide”, may be a certain point of reference.
According to the data compiled in the report, the average cost of hiring an in-house specialist is $83-112 per hour, compared to $40-90 per hour in case of outsourcing.
Despite of fact that there are more advantages of outsourcing in the team augmentation / staff augmentation model than disadvantages of this solution, the main factor determining the involvement of external staff, provided by software house, is cost reduction.
Nearly 70% of respondents participating in surveys conducted among Deloitte’s Clients answered that the key factor in making the decision to outsource was the lower cost of engaging specialists this way.
If you would like to check what would be the costs of expanding your with outsourced specialists from SOFTIQ, feel free to contact us and book a 30-minute, free consultation with our experts.
For us each project is different, and we will prepare an individual offer for outsourcing IT teams and specialists for you.
Outsourcing of IT teams and specialists in the team augmentation / staff augmentation model is a flexible solution that allows you to increase the number of employees involved in the project, depending on your current needs.
With the extension option, when the internal team does not have the appropriate skills or is unable to carry out the planned works before next deadline, you can secure the success of the entire project.
Outsourcing of IT teams and specialists has impact not only on the speed of work, but also reduces costs, as part of them are on the software house side.
Feel free to read our other articles
and download valuable materials!
Best practices and unique Case Studies of SOFTIQ projects. Download now!
Learn the advantages and disadvantages of staff augmentation and discover how much you can save by outsourcing specialists.
Check out the advantages of dedicated software and learn what benefits it can bring to your company.
This post is also available in: Polski (Polish)