Global business has been turned upside down by events of the past year: all of us needed to adjust to a new normal and change gears to develop the best course of response. However, the period of inertia has ended. Most companies are looking into the future: adjusting their strategies and accepting new challenges.
This year, businesses plan to become more competitive through digitalization, automation, and emerging technology. As per Harvey Nash’s survey, three-quarters of businesses reported increasing technology expenditures in response to the pandemic.
Respectively, the UK’s digital tech sector grew almost six times faster than the rest of the economy in 2019. Similar value shifts happened in other regions. Consumer spending has shifted online, growth is picking up too. But is there enough IT talent to facilitate new technologies adoption?
Bad news is — there is a shortage of IT talent to facilitate new technologies adoption. That leaves more and more companies at the crossroads: adjust the digital transformation timelines while looking for in-house talent or consider staff augmentation services from outsourcing vendors? And if it’s the latter, the follow-up question is: How do we ensure effective cooperation with a third-party vendor? We provide answers to these questions (and more!) in this post.
What is Staff Augmentation?
Staff augmentation may carry different meanings from one outsourcing firm to another since there is no definition set in stone by industry. You may also come across various terms referring to this type of service, like ‘time and material’ or ‘outstaffing’.
That said, staff augmentation extends beyond hiring people. Areas of responsibilities in resource and staff augmentation model Edvantis uses are as follows:
As evident from the table, a client gains access to the required talent, whom they manage as part of their team — by assigning tasks, setting KPIs, and informing them on your product development roadmap.
But if most responsibilities are on the client’s side – why not just work with a recruitment agency? Fair question.
Recruitment agencies cover talent sourcing, but provide no guarantees on hiring outcomes or offer any support with candidate retention. With staff augmentation, your vendor will provide you with both candidates hiring and infrastructure support— new hire’s workspace, equipment, payroll management, and more. This way your relationship changes from a contractor-client one to a value-driven partnership.
Benefits of Staff Augmentation Service Model:
- Infrastructure support: Your vendor handles new hire onboarding — legal, HR, accounting and payroll — plus sets up the candidate’s workspace.
- Relevant experience: Unlike all-purpose recruitment agencies, IT vendors have a more specialized talent pool. They can better understand your requirements and proactively advise on the best specialists to fill in the vacancy.
- Professional development: Outsourcing companies often help their specialists improve their skill sets (e.g., provide extra security training and professional development opportunities).
- Streamlined upscaling: Your business needs may change and you might need either more people or more than just people and infrastructure from your vendor. If that’s the case, your vendor will proactively help you hire more people. You can also easily upgrade from staff augmentation to other service models to better respond to the changing operating environment.
- Higher employee engagement: The vendor also provides your team with employee benefits – like paid sick leave and vacations, healthcare insurance, psychotherapy sessions, maternity leave, birthday presents, and more! Your new hires remain engaged and at lower risk of attrition.
To help you achieve your aims, staff augmentation service should fit your business context and contain well-defined and transparent terms and conditions.
This way, you can secure the right talent for your project. And your vendor gets a customer who may later on opt for other services, furtherly expanding your partnership (like in our case with Edvantis & Doc Cirrus partnership).
So it’s only fair that staff augmentation took on a more significant meaning in the industry. And with demand for IT talent soaring, the popularity of staff augmentation services will only strengthen.
Why IT Staff Augmentation Has Become So Competitive
The heating IT hiring market has kept HR offices extremely busy. So far, this trend does not seem to be reversing. Globally, 87% of companies recognize that they already have a technical skills gap or will face one soon.
What’s more, 44% of companies plan to increase IT hiring by 30% this year. A quarter also intends to raise it by 30%-50%. No wonder that with such tight competition, businesses continue to rely on IT staff augmentation services as an alternative sourcing strategy. Approximately 63% of leaders expect to spend the same amount or more on IT-staff augmentation.
So, how come IT talent is still hard to come by, even with the help of IT outsourcing?
Uneven Demand for Skills
Certain technical skills have seen a boom in popularity. For instance, the demand for DevOps rose by 319% and for Python programming — by 137%, as the Robert Half report states. CIOs and top tech owners are also actively seeking to hire cloud engineers, front-end developers, database administrators, and business intelligence specialists in the second half of 2021.
In other words: demand well exceeds supply.
High Qualified Professionals Receive Many Offers
Besides specialization, qualification is also an important driver of the talent competition. Max Ischenko, the founder of the biggest developer community in Ukraine, observed that 16% of candidates obtain 80% of job offers. An increased interest in the best talent drives both the demand for them and the need for competitive compensation.
What’s more, recruiters now seek more well-rounded specialists than ever before. Based on Gartner’s analysis, companies will list 33% more skills in job advertisements in 2020 than they did in 2017.
As a result, the hiring timeframe increased from 1 to 2 months of looking for most participants, on average. Also, about a quarter of participants report a hiring cycle that extends beyond 3 months.
What are the challenges you face in talent acquisition?
Source: The State of Talent Acquisition
Staff Retention is Crucial
There are lots of challenges the IT hiring market faces right now: tedious hiring cycles, inability to find qualified candidates for a predefined budget, and, subsequently, postponed tech projects. There is also another issue often overlooked: the need to retain newly hired employees.
Since the availability of talent is scarce, the best professionals are often poached by others, offering higher compensation and more interesting projects. Likewise, resource and staff augmentation service providers cannot always commit to retaining staff when your offer is below the market average. Or when you continuously fail to engage the onboarded workforce and treat them as an equal extension of your team.
How to Approach Staff Augmentation: Operational Checklist
Getting the right IT talent has never been as easy as snapping your fingers. As it turns out, retaining them is also not a piece of cake.
Staff augmentation facilitates the above. The vendor helps hire the required people on your behalf and ensures timely replacements if the person decides to leave. However, resource and staff augmentation cannot always help close the capacity gaps quickly and for the long-term, unless you treat such partnerships strategically.
1. Start with Role Definitions
Organizations should maintain a clear link between their strategic priorities and their talent needs, especially when the latter are not met. If you acknowledge your talent shortage, but do not understand what specialists you need and why, you may end up hiring the wrong people.
So how do you identify who you need and create a description for an IT outsourcing partner?
Creating detailed role descriptions is the first step towards an efficient recruitment process and successful resource augmentation. To do that you need to:
- Identify the missing skillsets and core competencies, required for the job at hand.
- Specify the tech, business, and seniority requirements you need from a new specialist.
- Define the scope of responsibilities for each role and how the role will contribute to the project.
To ensure the recruitment process is efficient and rapid, you need to provide your vendor with a list of specialists you need, candidate descriptions, and their role responsibilities. Your vendor, in turn, will shape this information into a staff augmentation proposal, detailing the terms of collaboration, deliverables, rates, etc.
As for the headcount, clearly defining the skill gap usually helps you determine the number of people you need to hire from an outsourcing partner. A good vendor will allow you to start with a few folks, scale-up, or even onboard a larger group right from the start.
2. Assess Your Experience with Managing Distributed Teams
Many companies do not realize that staff augmentation involves constant management and support for remote workers. Instead, they assume either those new employees will figure out everything on their own or that it’s the vendor’s responsibility to introduce them into the client’s processes. Such a mindset is a prerequisite for recruitment and retention failures.
Your journey does not end once the candidate accepts your offer. People expect their jobs to provide a significant sense of purpose to their lives, and it’s no exception with remote workers.
To be competitive, employers must help meet this need, otherwise, they will lose talent to other companies that do. For instance, one in five employees switched employers voluntarily in 2020 despite a massive worldwide economic recession.
With staff augmentation, you’ll have to onboard and manage new hires remotely, which is a challenge in and of itself. You will need to fully integrate them into your operations and provide workload allocation. Yes, your outsourcing vendor will help you administratively (providing a laptop, a place to work, HR support, payroll assistance), which makes things a bit easier. However, it’s your responsibility to introduce people to your operations, keep them on the same page with the rest of the team, convey requirements, and assign backlog.
Therefore, before signing the staffing agreement, you should assess how well you are prepared for outsourcing and managing distributed teams.
Make sure you can provide:
- Proper access, tools
- Points of contact
- Communication plan
- Clear meeting structure
If you’re not very familiar with managing remote teams, then you might like to consider alternative outsourcing service models, such as a managed team.
3. Plan Realistic Timelines
The bigger the outsourcing vendor, the more candidates they’ll have in their books to suggest for your projects.
However, as the demand for IT staff augmentation services rose, hiring timelines extended. Onboarding a 50+ person team in two weeks is either luck or luxury.
However, there are several things you can do internally to improve and accelerate hiring:
- Provide clear requirements for each candidate
- Have a designated point of contact
- Be available for interviews and screening
- Allocate a sufficient budget
- Warn about the changes if they appear
4. Switch to Long-Term Planning
With staff augmentation, you get the flexibility to start small and scale progressively. But scaling up is not a matter of days or even months, especially if your outsourcing partner doesn’t have access to updates on your timelines.
Particularly in a market as hot as this one, few vendors can keep a dozen of developers on hand just in case you or another company may need them. So it’s better to inform your external partners in advance about your plans to scale up, so they manage to find talent in time.
Let’s be real: most companies put down quarterly or annual plans for tech portfolio expansion. Large-scale tech projects are not planned in a day or two. While you may not have all the details ironed out just yet, give your outsourcing partner a quick update as soon as you are certain of the big picture — the decision to hire extra people for an upcoming bulk of work.
Another benefit of long-term planning is that you may be able to negotiate a better staff augmentation pricing model when you keep the vendor informed in advance about your upscaling plans.
Conclusion: Treat Staff Augmentation as Strategic Partnership
The IT talent market is scorching hot. The number of new entrants to the workforce doesn’t fill in the looming gaps in demand. Since hiring and retaining IT talent is a challenging task for all, outsourcing vendors too may pass on your collaboration request if your project requirements are unclear and plans for long-term collaboration are vague.
Given the circumstances, it’s time to stop restricting the definition of staff augmentation to just a temporary solution and treat it as a long-term opportunity for growth.
Learn more about our transparent staff augmentation service model during a free consultation. Contact us to schedule a call!