Staff augmentation can be more cost-effective than hiring and retaining in-house employees. You can eliminate costs associated with recruitment, employee benefits, health insurance, training, 401K, office supplies, and more. It is also more flexible as you can easily scale your headcount up or down based on workload demands.
A staff augmentation approach also enables you to hire developers in countries with lower costs of living which is often more cost-effective than hiring locally or in cities with a high cost of living.
Both models can be useful depending on your needs. In a staff augmentation model, you are responsible for managing any third-party staff. With a software outsourcing model, you are more hands-off as you assign day-to-day management and admin tasks to the outsource partner.
Staff augmentation is better when you want to boost your existing teams while staying involved at a management level. Software outsourcing is better when you want to remove yourself and fully delegate your software development to an external team.
While our software development teams operate autonomously, you are still in control and responsible for managing and guiding your team. This applies for both in-house and outsourced development teams, but you may reduce your involvement once the team is on board.
Both in-house developers and external software teams can be useful. External teams are a great option when you want to quickly scale your headcount, start new and one-off projects, or keep your in-house team focused on other business areas.
External teams are also effective for eliminating high-cost salaries, or expenses related to hiring, recruiting, and training talent. They help provide flexibility as new teams can be spun up quickly, giving you the ability to scale your headcount seamlessly according to workload.
When comparing costs, managers only tend to look at salaries vs hourly rate. However, it is more complicated than that. Commonly overlooked factors include the time spent on recruiting, missed opportunities, project delays, training people, employee benefits, and more. These can add up to an additional 29% of an employee’s annual salary. When taking this into account, it may be more cost-effective to outsource your software development.
Also, when hiring in high-cost cities like Boston, New York, and San Francisco, you have to pay higher salaries with better benefit packages. By outsourcing your software development to areas with a lower cost of living, you can tap into a high-quality, pre-vetted talent pool, while saving costs and aligning on time zones.
Most companies have in-house dev teams. However, they may still leverage outsourcing services for a variety of reasons. For example, they may have one-off projects that they don’t want to build a permanent team for. A project could have a hard deadline, and they may not have the time to recruit an in-house team for it. Lastly, using an outsourcing service long-term allows companies to respond to shifting workload demands in a more agile way.
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