Posted by paula.tellez on 21 Aug, 2019
As the talent offer becomes more scarce, outsourcing projects have become a common and even an unavoidable practice for companies where technology plays a big role in their business, let's be real that's all companies nowadays. These companies are looking for very specific profiles that are difficult to meet with a fixed set of skills. Therefore, a common alternative is to delegate some components of the development process to a service provider, with the capacity to meet goals and deadlines.
There are two common outsourcing strategies: managed services and staff augmentation. Both of them offer the possibility to staff a project responding to business objectives. Nevertheless, they also have significant differences in terms of control and flexibility.
This type of outsourcing strategy delegates full control of the project, including development, support, feedback and control of the main business affecting indicators, monitoring and reporting. In this way the service provider relieves the company from the execution and delivery responsibility, assuming the management of the process.
It may sound like a good alternative for many companies looking for scaling operations or exploring new business opportunities, but the main drawback is the lack of control. Managed services success lays on the service provider reliability. So, the lack of control of the company may be compensated by the experience and skills of the service provider. Further, the provider can get busy with other compromises and clients making the project late and usually ending up in a fight.
On the other side staff augmentation is an outsourcing strategy that allows hiring a contractor with specific skills, without losing control during the process. Staff augmentation allows companies to increase their team based on a temporary or long term use of specialized talent. With this strategy, the service provider augments the client workforce with specialized technical talents hired onshore or offshore.
Considering that recruiting is time and cost consuming and it is not easy to find the right set of skills on the IT industry, staff augmentation is a good alternative for companies to get access to a wider pool of talent. This outsourcing strategy may help to also leverage the existing staff with the skills needed to successfully develop a project.
The new talent is hired by the service provider, reducing costs and liability for companies. In addition, the service provider assumes all the organizational and administrative tasks, reducing your administrative load. This outsourcing strategy gives the opportunity to company managers to deal with core responsibilities and collaborate with the augmented team as they do with their in house developers.
The key of staff augmentation is having talent that is dedicated to only one company and the further along the better as more value is delivered when all parties know how to work together well and align their goals.
In terms of cost, offshore services are most cost-effective, but they are often difficult to reconcile with the local team working hours. Nevertheless, there are a wide variety of services to choose from, including nearshore alternatives with better culture and working hours compatibility.
Nearshore outsourcing companies are located in a neighboring region or location to the United States, where the operation cost is lower than in U.S. Most of Nearshore locations have a strong cultural affinity and an enthusiastic and stable workforce.
They also work hard to find talent that knows the technologies that the company requires and to constantly train that talent to achieve continuous improvement, our recommendation would be to find a company that believes in the agile values and frameworks so that the focus is on delivering value and not punching hours.
When hiring permanent employees, you are limited to your local market size, skills limitation and when technology is not at your company core you might not have the experience to hire the right talent. When you use a Staff Augmentation company you are tapping into a different talent market with different skills and lower costs while an experienced IT staffing company selects the best possible profile.
When you use a staff augmentation company you don’t have to worry about your companies human resources process which could potentially delay and complicate the hiring, and you only have to worry about paying 1 bill for all the assigned talent without any extra employee processes.
If your talent is located in a nearshore location like south America you could hire two developers for the cost of one in the United States.
In house employees imply administrative and organizational expenses such as office spaces, work stations, and other facilities. Even if some service providers allocate augmented teams in house; cost-effective staff augmentation companies run nearshore/offshore operations and they provide the infrastructure, workstations, and facilities, reducing the operation cost of your projects.
They also have facilities that are meant for creative and technical people, therefore, having an office space that provides the required creativity stimulation.
You may need one developer or a Full team with a specific set of skills, and a service provider will be able to exclusively recruit a team to meet your needs. This outsourcing strategy is the most flexible in the moment of granting access to a wider pool of talent.
With Staff augmentation, you keep full control of the project. The service provider will allocate project managers just to monitor effectiveness and allocate talent to fulfill your expectations. In addition, you have total communication with all team members, not just the project or product manager.
You can scale your business without taking payroll liabilities and adjust your team size based on your revenues or needs. Having a full-time development team available, helps you reach aggressive project timelines making you more competitive and therefore achieving growth.
At Atlanticsoft, we provide full time dedicated software development teams that with an agile mindset work on achieving early value delivery. We create value by following agile principles and lowering business cost to our clients through our own managed office in South America. We Attract the best talent in town with competitive salaries, great working environment and nurture continuous improvement by providing constant education and dynamizing the local tech community.