What is Staff Augmentation and What Flavors Does it Come In?

Staff Augmentation may be just a new fancy way of saying “Contractor,” or “Consultant,” or similar. However you want to define it, external professionals you bring on to your project become embedded with your own team; whether they’re on site or remote. Typically, these temporary team members will report to your own Business Analysts, Project Manager, Scrum Masters, or whomever your product/project owner happens to be. If you’re sourcing this talent from a firm, they will have their own general management and possibly project management, but but will usually report to someone on your team as a matter of day-to-day workflow.

Typically, staff augmentation will be a relatively simple affair. You’re going to hire an individual or a firm to provide contracting services; usually for a set period of time, maybe with an option to extend a contract. You’re buying skills that you will deploy to a project. This could be to backfill one or two people or add a special skill on a temporary basis. Another option is you’re staffing a whole team. This could be where the externally contracted firm provides not only engineering talent,  but also design, project management, and possibly business analysis as well.

Why consider Staff Augmentation?

As is often the case, the value of staff augmentation will vary by business, department and needs. Most often, the pattern is one of two general cases:

1. A business simply can’t find the talent it needs as full-time hires.
2. There’s a need for specialty skills that are likely temporary.

Other cases include…

• Desire to try to save money by avoiding overhead costs, (though of course, you’re paying someone for this one way or another).
• Save money by outsourcing to less expensive venues, (nearshore or offshore).
• Sometimes it’s a temporary start-up issue to jumpstart a project.
• There may be cases when working with external folks from other countries can help comply with local regulations or educate an internal team about local issues.

Let’s go over the general top two reasons companies seek staff augmentation help; the struggle for talent and then speciality skills. After that, we’ll go over a few other general ideas.

The Struggle for Quality Software Development Talent

As of this writing in 2024, there appears to continue to be a struggle to source quality digital development talent. This is often true even in the face of some tech layoffs. Despite the use of Artificial Intelligence as a type of augmentation itself, talented operators are still needed. Even when there may be a short-term glut of talent when businesses restructure or downsize, this is somewhat illusory. (See Global and U.S. Talent Shortage Report – Statistics & Studies, New approaches to the tech talent shortage, The Tech Talent Shortage: Everything You Need to Know While these stories are starting to age a bit, the theme seems to have held for years now.)

While talent needs run across engineering, design, product, etc., it can be especially acute for coding; possibly due to talent level and specific experience needed. (Perhaps obviously, leaving aside cost issues, junior front-end HTML/CSS/JavaScript is going to be easier to find than a Masters in mathematics with deep ML/AI experience.) Even with some categories being hot tickets and many learning programs helping teach more talent, (both academic and commercial), the supply/demand cycle for this talent seems strained. While companies talk about Digital Transformation as a thing, the reality is that everyone is already transformed in a way. That is, “Congratulations, like it or not, you’re already living digital.” The only question is where you are on the continuum and what comes next. Of course, I suppose it’s possible that some businesses are still mostly on paper, or using fax machines for some things. But at this point, (excepting some esoteric outliers), everyone’s got email, and everyone’s accounting system is digitized to some degree or another.

The questions about Digital Transformation and what it means are really about the depth to which business processes and integrations within and without the Enterprise have been deployed and will be continually managed. Organizations are all over the place here. Some may have internal operations at a high digital maturity level but have barely touched marketing tools. And vice versa. And everything in between. You can ask 100 experts as to just what Digital Transformation is and easily get 120 – or more – generalized answers. However, for any firm in particular, it might mean something holistic, or a more clear immediate focused need. Maybe a firm is focused on logistics automation, or marketing automation or… or… etc. etc. etc. It doesn’t matter what your particular thing is. Or what the marketplace motivation may be. Whatever it is, you’ll require talent to get it done. (Well…. maybe not. There may be exceptions where off-the-shelf tools or low-code/no-code solutions can take you far. But even these require some degree of acumen.)

As a result of the drive to take advantage of all the benefits of digital technologies, we’re in a spot where the professionals to get it done just are not being produced fast enough. Of course, from a practitioner’s perspective, it’s great to have a high-demand job skill. However, for companies, the salary pressures and therefore overall project costs can effectively price some otherwise valuable projects out of financial viability. Regardless, here we are. And if your situation is such that your HR costs to even seek out that right fit are just out of this world, Staff Aug(mentation) may start to look pretty good. Side note: My favorite job postings are the ones that look like this: “10 years demonstrated experience using ML/AI tools for e-commerce in virtual environments, preferably also has IoT skills with a masters degree in something or other. Pay range, $124K-132K. On site required, but it’s ok as we have a dog friendly office.  We don’t have a Foosball Table as that’s just so early 2000s, but we’ll pay for your stress/mood calming apps.”

Immediate and Temporary Specialty Skills

Let’s say you’ve got a Salesforce integration need, but no serious in-house skills and no one available to train up. Sure, you could hire a specialty firm on a project basis. Maybe. That is, there are plenty of firms that specialize in Salesforce integrations. However, maybe they don’t cover your scope. And besides, I just used SalesForce as an example, perhaps your needs are with more esoteric tools that don’t have as much of an ecosystem around them.

For example, let’s say you want tight team integration and want someone available for the 6 months you estimate some new project is going to take. You need someone with 3D coding skills for one aspect of your UI/UX, but that’s only going to be a small part of the overall project. Yes, once this is all done, things need to be maintained, but for what you have in mind, once the core development is done, knowledge transfer to your existing development or DevOps team should be able to handle the maintenance on the new code base. In this situation, there’s perhaps no need for a full-time hire. What about IoT? Need that? Have those skills in house? Blockchain? Augmented/Virtual Reality? What about the next thing? Metaverse burned out fast as the Flavor of the Month, but was quickly replaced with Blockchain/Crypto. Or was it ML/AI? Or both? Definitely AI. Blockchain is still simmering but isn’t even quite al dente yet; at least from a mass market consumer perspective. Maybe metaverse comes back next week. Maybe the next new thing. The point is, unless you’re actually inventing that new thing, if you need a piece of cutting edge or bleeding edge tech, you may need to contract out for some of these skills as your team is likely perpetually overwhelmed with the day-to-day. (Though maybe that’s worth fixing as well, but that’s a wholly separate topic.)

By the way, just for fun, you’re probably not looking overly carefully at the graphics I’m using to try to break up this text a bit. But did you notice any typos in the graphic in this section? Here’s a response from ChatGPT-4, DALL-E3 regarding my request to fix the typos in the image it made for me. “The updated graphic has been created with the same refined and business contemporary style as before, but this time all text labels have been carefully corrected.” But it’s still wrong. After several attempts with differing corrective prompts. So even the leaders in new spaces are still getting things a bit off. How are you going to handle these technologies?

Why Use Staff Aug over “Project?”

Staff Augmentation is usually lighter weight in a lot of ways than a full Project engagement. When you’re buying project work, you’re buying some form of set product or service outcome. The agreement you reach with an external provider may be time and materials, fixed price, or any number of possible payment agreements. (See my articles on  When to Work with Software Development Companies  and How to Work with Software Development Companies – Part 1 ) Regardless, you’re contracting for an outcome. Now, this may seem like a subtle difference. After all, you’re always seeking some desired outcome. Nevertheless, there are differences. Typically, staff augmentation has shorter durations to fill gaps. Though not always. Some arrangements can last for years. And staff augmentation is – again, at least typically – less formal. Personnel assigned will likely be part of your Agile team; whereas for project work, to at least some degree you’re sometimes throwing requirements over a fence and seeking results only. This is not always the case though. With Agile process, it’s more often the case these days that there’s still tighter integration than just dumping a requirements document on a contractor. But still, contract project work typically has somewhat well-defined milestones as compared to a big agile product backlog. One key difference with Staff Augmentation – versus Project – is your team members are not so much milestone-based – even though they have goals/objectives just as with any employee – but rather, they flow along with your existing team as needed.

Think of it this way… for simple Staff Aug, you’re likely going to be paying every month for time, just as with your typical workforce. Your extended team members are probably operating closely alongside your internal personnel and in the same project management system. For project work, you will likely be paying monthly, or by milestone, or project completion, or some combination of criteria. Again, the essential difference is one is about time/effort, the other is about outcomes.

Do You Actually Save Money?

Using Staff Augmentation as a form of outsourcing won’t always represent some kind of huge cost savings to your project. If your main purpose is to get specialty talent, chances are that specialty has some increased costs and cost savings aren’t your primary goal. Lately, this often means hard to find Machine Learning/AI talent. But maybe for other specialties. Cybersecurity, threat surface analysis, data science, and other specialties may be hard to impossible to hire for within your organization depending on the talent crunch. Over time the specific disciplines will of course vary.

Regardless of the talent type, even when nearshoring or offshoring to specifically find lower costs, there’s usually some kind of communications overhead. Often, when running the financial comparison of full-time hire vs. contractor, you’ll see spreadsheets for calculating costs that subtract things like benefits, overhead, and so on. This is all true, but perhaps only to a degree. Someone somewhere is still paying for these things. It’s perhaps similar to home ownership vs. renting. Renting vs. buying a home may save money in some ways, but still… someone’s covering the costs and you can bet the landlord expects to have the rent cover expenses. Nevertheless, there are at least a few obvious means for saving money even if some of the ongoing variable cost savings may not be as significant as one might initially believe. You generally don’t have the upfront expense of HR. When doing staff augmentation via outsourcing, you may still spend some time interviewing candidates, but this will, (or should), generally be much less than the often non-trivial costs of sourcing candidates yourself. If your benefits include things like severance, that of course will be a non-issue. And perhaps most important is duration. If hiring for a 3 – 6 month gig, the costs of onboarding/offboarding employees make staff aug a clear win. (Though generally, shorter gigs will incur some additional onboarding/offboarding costs in the form of fees or rates since – external firm or not – there are usually some kind of switching costs.) It may also be possible your main operating location requires mandatory, (and potentially expensive), overtime pay, staff aug may help a lot in managing these costs.

Fuzzy Benefits – External vs. Internal

Your own people may be highly talented. And ideally, you also provide great training opportunities for them. Their advantage to your company should be that over time they have both deep explicit and implicit knowledge about your company, its systems, end users of those systems, and so on. And yet, even with training and conference attendance, online forum usage, AI helpers, etc., they may remain – or become over time – somewhat insular. Someone from the outside will bring that proverbial, “fresh perspective.” That being said, the ole’ saying about there being a problem with someone who is “too close to the problem,” can also be countered with the other side of the argument, “yeah, but you’re too far away.” Let’s assume for a moment that there’s a balance. That is, there’s value in both of these ideas. Someone from the outside may take time to get up to speed on your systems and culture. But besides just being an outside perspective, they may have some other ‘hard skills’ that you’re internally lacking. A solo consultant, to remain viable, has to be hustling to keep up skills and demonstrate solid competence to keep winning business and get good referrals. This is also true not just for an individual, but for any external whole firm. And with firms – over solo contractors – there’s the benefit of others sitting next to your extended team member(s) either in an office or virtually. Yes, the magic of Google University and Stack Overflow and such offers even the developer in an Arctic research station access to help. Still, there remains a value for a developer to be able to shout over to a few co-workers and say, “Hey, anyone know a good Java or Python library for this XYZ problem?”

The final point here is that the combination of deeply entrenched employees mixed with some outsiders may together be a more powerful team. Over time, even as the external team becomes inculcated into your team’s culture, they’ll still likely be getting exposed to a wider range of new ideas through their own firm’s and colleagues’ cross-industry experiences.

Sounds Great. Are there any Negatives

Of course, there are pros and cons to all things. Some potential issues to watch out for:

• Ramp-up costs may be non-trivial. Just as with any employee, getting people up to speed will take time and effort. Getting system credentials, showing them where the git repositories are, here’s Jira, here’s the Wiki, read this, read that, talk to John, talk to Jane, etc. etc. etc. etc. And this gets worse if you bring folks on one at a time.
• You don’t always have as much control as you’d like. These are, (but really aren’t), your employees. Anyone who’s been a hiring manager for any length of time knows that people are going to go and do just exactly whatever the heck they want or need to do. Hopefully, your own personal, business, life, and health are great. Or you may have your own challenges, (sick parent, kids, drugs, whatever), and so do your employees. But whatever their problems may be, as a manager on the hook for the outcome, they’re now yours too. And regardless of what kind of corrective actions you may choose, you have to have some clarity on the issues at hand first. You might not get a sense of such problems with an external provider as quickly as you might with a closer employee. Thankfully, serious problems should be rare, but, they’re out there. They’re going to happen sometimes.
• Even though quickly removing a bad contractor may be easier than an employee, it can still be a hit to time/effort/morale. This doesn’t change.
• Once the need for an outsourced team member is over, you lose that tribal knowledge. You could try to hire that person full-time, (assuming any contractual non-competes can be negotiated away), but that individual might not even want that kind of relationship. Some contracts have stipulations about hiring such potential team members. These may range from “You must not – for a period of at least a year – hire any of these folks,” to “You may opt to hire a contractor full time based on mutual agreement… for a small additional fee.” Contracts can be all over the place for a variety of line items. And of course, can be re-negotiated. Just be aware of these clauses if you think they might be an issue for you.
• Getting the same resource in the future. If you had a great experience with someone in the past, that individual might not be available for an upcoming need. Whether a solo contractor or via a firm, it’s not like they’re going to sit there waiting for your next need once their contract is up. They’ll be on to the next thing. So, for example, as your contract gets to an endpoint, you. had best work with the delivery or sales team at your contractor long enough before the end of your contract to renew without interruption. Whether this is a month or several before the end of a contract will depend on the vendor. You need to ask about this early as you cannot expect a vendor to not re-assign someone immediately if you haven’t locked in a renewal.

What Should You Be Asking a Potential Staffing Partner?

Due diligence will vary depending on whether you’re talking to an individual or a firm. But beyond the obvious skills, costs and references, here are some basic questions to consider:

• How long has an individual worked for a firm? Or if on their own, how long have they been doing solo consulting?
• If a firm, how often has there been staff turnover on other client projects?
• What are the provisions for terminating poorly performing team members? And for replacing them if necessary?
• What are the provisions for vacation time or other paid leave? Everyone deserves proper time off for sick days, vacations, etc. However, if you’re paying for actual hours or days of work, how does this work with your staffing partner? Are they directly allocated in the contract or just part of your vendor’s overhead?
• Can or should team members work on site at all or will all work be remote? And if on site is required, (possibly temporarily for ramp up), what additional expense costs may be involved? (Remember, requirements for work location may be issues when it comes to classifying workers as contractors or employees. Make sure everything you do is cleared by legal.)
• For firms, are team members offered benefits? (You may be concerned that lower end “body shops” don’t treat their employees well and, leaving aside moral issues, chances are that will affect quality and turnover for your projects.)
• If the particular roles you seek do not have individuals at a firm immediately available, how does the recruitment process work? Can they quickly find people for you? (Note: If your expectation is for immediate on-demand services for skills, you may be disappointed in skill level. Some firms may have talented folks on the bench, having just come off a project. But often this won’t be the case.) So the question becomes, how long does it typically take to fill a request to staff a role? And if a recruitment search is necessary, what – if any – is the increased cost for that? (It might be small or large, or depend on the intended length of engagement. With a year-long commitment, an external firm may roll this into their overhead. For three months, they may need to pass onboarding costs to you. Even if these may be less than your internal costs, it’s an additional factor for your budget consideration.

Staff Augmentation Conclusion

Staff Augmentation. Personally, I’ve bought this. And I’ve sold it. And I’ve been it. Having been on all three sides of the desk I can tell you it can be a great answer to backfill for some short-term project needs. I’m not necessarily a fan of using this for longer-term projects, though I have seen it work in mature client/vendor relationships. As with anything else though, you have to be crystal clear on just what it is you’re buying. Or in this case, renting.