Staff Augmentation VS Dedicated Team – Which is Better for Your Company?10 min read
In an uncertain and dynamically changing business environment, the demand for specialist IT services is constantly increasing. However, the lack of skilled software developers is a reality that today's market has to face and adapt to. Fortunately, IT outsourcing has come to the rescue. With its myriad benefits – optimizing project time and costs, tapping into the knowledge base of a skilled IT partner, increasing operational efficiency, you will be able to focus on your core business. That's why more and more companies are transferring IT responsibilities to third parties. When it comes to IT outsourcing, many companies find it difficult to choose between staff augmentation vs dedicated team.
There are different partnership models with a software vendor to choose from, with staff augmentation and outsourcing a dedicated team of professionals considered among the most popular.
But which one should you choose?
First, let's go through a brief description of both models.
What is Staff Augmentation?
Staff augmentation is an outsourcing model whereby a software development company offers its talent to fill a gap in technical expertise in your current team. Outsourced developers work remotely as part of your engineering team. Staff augmentation is also known as team expansion.
Typically, IT staffing up is done under a time & materials business model, which means the cost of staffing varies depending on project scope and workload. Another possibility is that a fixed-price business model requires a fixed budget and a well-defined project scope.
Remember that when choosing to increase staff over traditional in-house hiring, you still need to engage and attract new tech talent to your internal team. Dedicated groups have no such problem.
What are the benefits of Staff augmentation?
Staff augmentation is an effective tool to meet changing customer needs and business challenges while increasing agility. Here are some of its benefits.
- Flexibility: One of the key benefits of staffing is that it allows organizations to increase or decrease their workforce as required, in the same way, a retail store might hire seasonal workers to handle the holiday rush.
- Cost-effective: Grow your team with no infrastructure investment and eliminate the cost of hiring and training internal staff. In this model, clients pay only for what they need and can access specialized, in-demand skills on an as-needed basis.
- The provider handles administrative tasks: The staffing also eliminates the need to find, interview, and train employees with the right skills and experience. Suppliers must address organizational and administrative responsibilities, allowing customers to focus on their core businesses instead of paperwork and referrals.
What are the cons of Staff augmentation?
- Can be expensive: One of the biggest mistakes companies make when outsourcing is using staffing as a way to avoid hiring full-time employees or the expense of hiring a dedicated outsourcing team on an ongoing basis. Used inappropriately, staffing up can cost you more in the long run than a longer-term in-house solution.
- Not ideal for ongoing projects: Staffing isn't great for long-term projects or finding the talent you need constantly. Workers may need to take on other projects or leave the supplier's company for a more permanent role before the project ends. Additionally, staffing increases are often billed under a time and materials pricing model, which means you could incur unnecessary costs in the long run.
- Not suitable for institutional knowledge-based projects: Where a project requires a deeper contextual understanding of the client's business, employing increased staff often means a long growth period.
- Risk of developing dependence: In some cases, increased employee use may increase reliance on a third-party vendor. For example, if you are increasing staff to access the same expertise across multiple projects, there is no guarantee that a supplier can provide the required talent. If you constantly need a particular skill, you should hire in-house staff or establish a long-term contract with your outsourced service provider.
- Inconsistent quality: The nature of employee enhancement shows high turnover, as employees often work on short-term contracts or a freelance basis. In turn, that means the same people may not be available to take on projects when needed. As a result, customers have to work with different suppliers and employees, which can create inconsistencies in quality.
When to use Staff augmentation
Any collaboration model works better for certain types of businesses and relies on many key factors. Boosting the IT team is the perfect fit for a business with a strong internal IT team and a trusted management team from the start. Conversely, if the internal team is too busy with other tasks and the project needs to be completed quickly without internal management, then it is highly recommended to consider other options, e.g. outsourcing.
Strengthening your software team will work well for your organization if:
- You are planning to hire programmers in rare numbers from other locations as they are difficult to find in your local market;
- You are planning to hire some professionals from other locations because your local market is short of suitable talent;
- You expect to manage and communicate with new members of your team on a regular or daily basis;
- You want to integrate a remote expert into your internal team.
What is a Dedicated Development Team?
A dedicated team is an IT outsourcing model based on which a company provides you with a remote software development team completely dedicated to your product and business goals. Outsourced developers are hand-selected according to your requirements and can be managed from your side.
A dedicated team addresses an obvious limitation of outsourcing – the lack of individual leadership and a sense of unity.
With other IT outsourcing models, you still get a product at a great price, but you can't be the leader of the team that brings your vision to life. You don't have much to say about who works on the project and how it should be managed. A dedicated team will negate this issue by providing you with the ability to be the leader of your team as well as participate in the hiring process.
The sense of unity that a dedicated team brings is especially important for startups and innovative products, where creativity is a key success factor.
Hence, the only reminder that your team is outsourced – team members are not in your office. However, with modern work monitoring and communication tools, this ‘remoteness' hardly becomes noticeable. Especially now, when half the world is working from home and some companies are transitioning to working remotely entirely because of the pandemic and the massive paradigm shift associated with it.
Alternatively, some members of your dedicated team may visit you in your home country, which is also a common practice. As a result, you can strengthen partnerships, improve communication, and enhance relationships between you and your team that can last for years to come.
What are the benefits of hiring a dedicated team?
Customers often choose this outsourcing model when they need to upskill to take on new projects or keep up with increased demand but lack the resources to find, hire and train skilled workers.
Here are some benefits of adopting this approach:
- Enable internal and external teams to work together. If you're working with a nearshore company, dedicated development teams can easily collaborate with your internal staff and work as a unified, distributed team.
- More controls: Because this model supports a high level of customer involvement, it allows organizations to maintain a greater degree of control over processes, processes, and quality standards.
- The costs are predictable: Compared with staffing, working with dedicated development teams gives organizations predictable costs. Customers pay the same flat rate each month, allowing for more control over their budget.
- Scale up or down as needed: Customers can easily add or remove team members to scale up or down as required. Multiple contracts allow customers to temporarily add additional developers to their existing plans to meet short-term spikes in demand or access a skill for a specific project without the cost or potential labor law violation of trying to do this from home.
What are some limitations?
Working with a team of dedicated software developers offers many compelling benefits. However, this model requires a lot of planning, collaboration, and a clear picture of how your outsourced team will help you achieve specific goals.
Since this strategy requires customers to invest time and resources to incorporate external developers into existing teams, it is not always the best solution for organizations that lack the time or lack of cash.
Here are some downsides associated with this option:
- Not effective for short-term projects or goals. In most cases, you usually contract to work with a dedicated team to add permanent or permanent capacity. As a result, external teams often maintain a steady pace and are not really equipped to meet short-term needs. Basically, using dedicated groups in this way is like what happens when your internal team is spread too thin.
- It may be more expensive than other pricing models. For short-term projects, maintaining a follow-up workgroup can be more costly than picking time and materials or fixed-price contracts, as you will need to outsource a certain amount of work to get the most bang for your buck.
- Managing dedicated teams is a big undertaking. While the supplier takes on the responsibility of recruiting talent, calculating rates, and matching customers with the right people, companies using this model should be prepared to invest significant time in managing external teams.
- It is worth noting that in an internal survey of Tiempo employees, many respondents emphasized the importance of integrating external employees into the company culture. For clients, that means keeping channels of communication open, setting clear expectations, and engaging in team-building exercises.
When to use a Dedicated team?
Dedicated developers and teams work well for startups, which allows you to find programmers quickly without investing heavily in the recruitment process. Furthermore, if your product still needs to pass the discovery phase, such a collaboration model involves time and keeps you steady without overspending.
This way, the internal team can focus on core activities, while your dedicated team will quickly deliver additional activities and processes.
- Long-term or complex projects. If you're looking for ongoing support, dedicated teams are a reliable, cost-effective alternative to staffing. Projects that require a contextual understanding of the business and its goals, as well as those that involve testing, updating, and continuous improvement, will benefit from this model.
- Dedicated teams build on knowledge over time and learn about the organization. By contrast, using temporary staff means that the customer has to constantly hire and retrain new developers to catch up to the position where the team eventually stopped.
- The internal team lacks the knowledge or resources to meet business needs. In situations where an in-house team doesn't have the time or skills to take on new projects, or the client lacks the resources to hire new employees, then dedicated teams present an attractive option in between. If you are working with a nearshore provider, dedicated development teams will provide the same experience as an inbound delivery team, at a much lower rate.
- Projects in which scope changes or requirements are unclear. If you are working with a dedicated nearshore team, this model is effective for projects that require teams to adapt to changing requirements or where specifications are not defined. With the right strategy and tools, internal and external teams can adopt Agile best practices and get to market faster.
Staff Augmentation vs Dedicated Team: What to Choose?
While the dedicated team and employee enhancement are closely related, these IT outsourcing models are not interchangeable.
On the other hand, if your company has absolutely no technical expertise or needs a team for a new project, then a dedicated software development team is the right choice. The same goes for subprojects within larger projects. In these cases, the increase in staff will not be cut.
On the other hand, staffing up is great for quickly getting the missing talent to an ongoing project. When the scope of your project changes or people leave, the need for new software development professionals can become urgent. Finding the right person with relevant experience can take a lot of effort. Software development companies likely already have experts or an efficient recruitment department and process in place to quickly supply the missing talent. In this case, the dedicated team model is overkill.
Simply put, the world of IT outsourcing is full of opportunities to express your ideas. If the mentioned partnership models do not meet all your needs, you can always contact a reputable software development company like Groove Technology and discuss your requirements and possible alternatives. If you need a dedicated team, staff reinforcement or other software development services, feel free to contact us. With years of experience building digital products and technology teams for international companies, we can find the right people to make your vision a reality.