Staff augmentation is a common feature in today's global business landscape, where companies enjoy cost-effective working methods and access to better quality and more affordable talent. Staff augmentation offers fast-growth businesses the opportunity to adopt the lean and agile growth strategy – handing over non-core functions to lower-cost specialists – thanks to advancements in digital technology.
Before you bring in external resources to run parts of your enterprise, it is worth pausing to consider the features, benefits, and downsides of staff augmentation. Use this guide to explore the different models of staff augmentation, compare the pros and cons, and learn the steps to increase the capacity and capability of your global workforce.
What is Staff Augmentation?
Staff augmentation is a business strategy for increasing talent capacity in the interim with qualified temporary workers or contractors to achieve specific project goals. These short-term hires are usually paid by the hour and procured through a third-party staffing agency or an online talent platform. Staff augmentation is a business solution for fixing fluctuations in demand when a company needs more or less of a particular skill set or role.
Background and History
Staff augmentation is a part of the broader Business Process Outsourcing model (BPO) that began in the early 90s. Developing countries in Asia provided fast-growth companies in North America with low-cost, non-core, remote labor in back-office and customer service functions to reach new levels of efficiency and scalability.
Over the years, staff augmentation has expanded to IT, Finance, Healthcare, Communications, and numerous other sectors and continues to grow. In 2021, the Global Contract or Temporary Staffing Market Size was USD 90 Billion. Today, the market is projected to grow to USD 130.20 Billion in 2030.
Outsourcing Model vs Staff Augmentation
Staff augmentation differs from the traditional outsourcing model in control and involvement. With outsourcing, the vendor is fully responsible for the day-to-day management and performance of the staff. The business could rest easy and expect full delivery of outcomes from the vendor. The drawback, however, is that it needs more control over the work.
Whereas with staff augmentation, the business has more control and involvement over the contracting, management, and output of the staff working directly with the existing team. Another key difference is the level of commitment required. Outsourcing typically engages in long-term contracts, with the promise of continued growth and efficiency gains, while staff augmentation can be on a project basis with less commitment.
Pros of Staff Augmentation
Maintaining a permanent workforce can slow a business down. It takes more time, energy, and money to keep full-time employees engaged enough to upgrade their skills with ongoing training. Staff augmentation lets you acquire skills and resources on demand. Achieve speed, functionality, and flexibility in your operations by leveraging the business benefits of staff augmentation.
1. Access to Quality Talent
Access skills and expertise from around the world and hire trained professionals ready to work virtually with the existing team.
2. Diverse Workplace Culture
Tap into a diverse pool of highly skilled professionals from different cultures, backgrounds, and ethnicities across the globe. Introduce new skills, perspectives, and ideas to the team, and foster an inclusive and innovative work environment.
3. Flexible Staffing Solutions
Scale your teams quickly and efficiently even as you experience fluctuations in demand or are working on a project with a tight deadline.
4. Quality Assurance
Staff augmentation brings in professionals with specialized skills and experience, trained to deliver on your project goals, so you can rest assured that the work is of the highest quality.
5. Business Continuity
An augmented remote workforce helps you maintain operations during disruptions, such as employee turnover, inclement weather, technical outages, and unexpected absences.
6. Reduced Overhead Costs
Permanent employees entail many costs, such as payroll taxes, health insurance, office perks, and other fringe benefits, while independent remote professionals do not require the same benefits, eliminating these expenses.
7. Extended Skills and Competencies
Infuse your organization with a wide range of skills and competencies outside the existing team. Build a deep bench of highly skilled workers to broaden horizons and tackle new opportunities.
8. Accelerated Capacity
Staff augmentation supplements your current team with highly skilled talent to ramp up capacity quickly – enabling you to complete projects and meet expansion targets on time.
9. Reduced Training and Onboarding Time
Bring in professionals already trained and experienced in their field to reduce recruitment, training, and onboarding costs of permanent employees, then invest these costs elsewhere.
10. Smarter Hiring Decisions
There’s a lower risk of engaging a “bad hire” in staff augmentation, which lets you test for skills and abilities and assess how the staff fits into your culture before committing to a long-term employment contract.
Cons of Staff Augmentation
1. Dependence on External Resources
Staff augmentation may rely heavily on outside resources, which may increase management complexity and expose weaknesses in the company’s data and security systems.
2. Communication And Coordination Concerns
Personnel augmentation can cause communication and coordination challenges between the external staff and the internal team, affecting project efficiency and effectiveness.
3. Lack Of Knowledge Transfer
With staff augmentation, it may not be possible for the external staff and the internal team to share their knowledge, which can hurt the project's long-term benefits.
4. Risk of Low Morale Among Current Employees
Personnel augmentation can lead to employee morale difficulties since internal staff may feel intimidated by the presence of external staff or that they are taking over their duties.
5. Cultural Mismatch
Staff augmentation can result in a cultural mismatch between the external and internal teams, which can influence the overall work environment and productivity.
Types of Staff Augmentation
Below are five staff augmentation business models that employers can consider to extend their capacity and the pros and cons of each type for comparison.
1. Full-time Equivalent (FTE)
This model involves hiring a full-time employee in the interim to work on-site. Best for businesses that need a dedicated employee to work on a specific project or set of tasks for an extended period. However, when you need a worker to hit the ground running, FTE can be a costly staff augmentation pricing model because it’s time-consuming to find and onboard the right staff.
This model describes hiring a contractor or consultant to work on a specific project or set of tasks. This model is best for businesses that need specialized skills or expertise for a short period. It is less expensive than FTE augmentation, where the company is only committed to paying the contractor or consultant after the completion of the project.
This model entails engaging employees who work exclusively from a remote location. It is best for businesses that need a fast and cost-effective way to acquire more capacity by accessing the global talent pool. Digital transformation and Covid19 have made remote work increasingly popular as more businesses and talent embrace it.
4. Managed Services
This model requires the staffing and management of a particular function or department to a third-party staff management provider so the enterprise can focus on achieving strategic goals. It is best for companies that need to quickly build a team of experts to manage a specific area. Managed services as a staff augmentation pricing model offer more value for your investment because you bring in an external manager to operate the unit on your behalf.
This model combines a mix of FTEs, contractors, remote workers, and managed services for businesses to acquire expertise as needed. It’s a complex strategy used by medium to large companies that require customization of business functions.
Choosing the Right Staff Augmentation Model
When selecting a suitable staff augmentation business model, there are essential considerations to remember: the specific skills and expertise needed, the length of the project or initiative, the cost, and the level of control and oversight required. Ask yourself these questions to get on the right track.
1. What tasks, projects, and initiatives need to be done?
The first consideration in selecting a staff augmentation model is determining the tasks and projects the company's current workforce can't handle.
2. What are the skills required to get the job done?
Name the specific skills and expertise needed for the project to get done. It will help to narrow down the pool of potential candidates and make it easier to find the right fit for the role.
3. What is the length of the engagement?
Another important consideration is the timeline of the project or initiative. If the project is short-term, it makes more sense to use the project-based model. An FTE model may be more appropriate if the skills and expertise needed do not have an end date.
4. How much is your staff budget?
Some models, such as project-based staff augmentation, may cost more in the long term if the project exceeds the terms of the contract. FTE is more expensive upfront but may save on cost in the long run, especially if there's an ongoing need for staff.
5. How much control do you want to have over managing staff?
Project and externally-managed staff work best independently, while FTEs require a structured communication and collaboration regimen to succeed.
How Staff Augmentation Works at Pharmbills
The fastest way to access pre-vetted specialist staff is through a managed solutions provider like Pharmbills. The hiring process should be quick, easy, and worry-free, with careful planning and clear communication.
Here are five steps to successfully hire augmented staff at Pharmbills.
Step 1 - Assess
Determine what roles or functions you want to hire and the specific skills or expertise you require. Consider the goals you want to achieve through staff augmentation and your budget. It will help you identify the right staff to meet your needs.
Step 2 - Prepare
Prepare your brief for prospective staff providers who will put forward candidates for your consideration. It may include drafting a request for proposal (RFP), outlining the scope of work, and identifying key performance indicators (KPIs) to measure success.
Step 3 - Evaluate
After you have received candidates from potential providers, evaluate them carefully. Look for candidates with a demonstrated track record of success in similar projects and an understanding of your needs and goals. Consider factors such as cost, expertise, and communication skills.
Step 4 - Hire
Once you have selected a candidate, it's time to commit. It might involve signing a contract, agreeing on a budget, and establishing a timeline for the project. Be sure to communicate your expectations, and set up regular check-ins to ensure everything is on track.
Step 5 - Onboard
Start the transition by training your new staff on your processes and systems, providing them access to necessary resources, and setting up communication channels. Be sure to monitor the transition closely to ensure that everything is running smoothly.
When it comes to workforce improvement, there isn't a magic bullet that solves all your capacity problems. Staff augmentation may be a good option for your organization if you want to scale up and gain new skills without hiring more FTEs. Consider a Managed Services Provider who comprehends your change management challenges and offers flexible options – fast skills to get you to the finish line or investable talent to achieve long-term strategic goals.
Access Qualified Staff
Whether you need to fill a single role or build an entire team, Pharmbills' specialists are ready to accelerate your capacity today in IT, Admin & Support, Data Management, Accounting and Finance –
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What is Staff Augmentation?
Staff augmentation is adding more employees or contractors to an organization's existing workforce to satisfy particular project or operational demands.
What advantages does staff augmentation offer?
Staff augmentation can give access to specialized knowledge and abilities, flexibility and scalability, and cost reduction in permanent staff recruiting training and perks.
What distinguishes staff augmentation from outsourcing?
Outsourcing entails the transfer of all company operations or procedures to an external source, whereas staff augmentation entails temporarily adding personnel to boost an organization's existing workforce.
Which roles for staff augmentation are frequently employed?
Various experts, including IT specialists, engineers, product managers, and other specialized positions, may be included in staff augmentation.
How can a business choose the best staff augmentation provider?
A corporation should consider a provider's track record, expertise, and availability of the specific skills and knowledge required for the project. The business should also assess the provider's project management and communication skills.
What dangers come along with staff augmentation?
Staff augmentation can come with hazards, including a lack of control over the caliber of work and misalignment with the organization's culture, values, and long-term objectives.
How can staff augmentation be made successful?
A well-defined scope of work, effective project management, and clear communication can all contribute to the effectiveness of staff augmentation. Additionally, it's crucial to define the duties, responsibilities, and expectations of the staff augmentation workers.