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With more businesses undergoing digital transformation and adopting various business solutions, the demand for experienced software developers is only rising. Besides hiring an internal team, companies have another option: cooperating with third-party software development vendors who will deliver the results the business needs.
However, to achieve the desired outcomes, you need to choose the right model to cooperate with the service provider. In this article, we will compare two common options: staff augmentation and managed services with its main pricing model called dedicated team. What option will be the most beneficial for your company? Let’s figure it out together.
All you need to know about staff augmentation
Staff augmentation is a process of hiring specific specialists on a temporary basis. You might ask: how is it different from regular hiring to your in-house team?
The main difference is that the specialist you are hiring is actually employed by a software development vendor. This company is responsible for employment details of the augmented developers, like compensations, benefits, equipment, etc., while you, for an agreed fee, get a full-time or part-time employee who will work under your management together with the rest of your in-house staff.
Staff augmentation is one of the most popular services the software vendors offer. There are even software companies that focus solely on staff augmentation and provide their clients only with this service.
How do staff augmentation services work
The staff augmentation model implies that the vendor unites developers with different technical expertise and experience who work within clients’ development teams.
The vendor hires developers and takes responsibility for administrative aspects: signing an employment contract, providing employers with workspace, equipment, and other infrastructure, managing payroll, and doing taxes.
When a client comes to the staff augmentation vendor and requests a position to be filled with appropriate developers, the vendor initiates the hiring process that usually includes the next steps:
After that, the augmented developer integrates into the team. The cooperation term is unlimited: everything depends on the agreement the client reaches with the vendor.
The vendor usually charges clients by hours for every augmented specialist, so the monthly price might change depending on the scope of work the developers complete. The hourly rates vary on the basis of developers’ specialization, level of skills, and experience.
Pros and cons of staff augmentation
What benefits can staff augmentation contribute to your in-house team? What tricky pitfalls does it have, and would your business be able to handle them?
Advantages of staff augmentation
Efficient Human Resource Attraction
Quite often, your team can feel a lack of certain skills, and this leads to lost opportunities or constant disruptions. To fill this gap, you need to obtain this expertise quickly. Hiring augmented staff is the fastest solution to this problem, as it won’t demand excessive efforts from you like other solutions (hiring in-house employees, sending your current employees to improve their qualifications).
Sometimes, you also don’t need a full-time contribution from a developer with the required skill. Staff augmentation allows you to cooperate cost-efficiently with such a specialist as much as you need.
Flexibility
Expanding your development team with augmented developers is much easier than hiring full-time employees. Instead of going through the whole hiring process, signing contracts, and discussing benefits with each separate specialist, you can just sign one contract and delegate these tasks to the vendor. Hence, scaling or downsizing your team becomes quite quick, and you can tailor the team size to your changing goals pretty easily.
Wide talent pool
One of the biggest benefits of staff augmentation is that you are not limited to any location to hire a developer. Moreover, hiring a developer from another country might be even cheaper, and you won’t need to allocate expenses to their relocation. This allows you to gather a more skilled expert staff.
Full control over the project
While bringing a third party to your software development project, you still get to manage the process only through the efforts of your internal team. If you have experienced managers and established processes, it would only make sense to keep following your strategy and keep full control over the development, developers’ workload, and priorities.
Disadvantages of staff augmentation
Possibility of long ramp-ups
In theory, the onboarding of augmented staff could be faster than the onboarding of full-time employees. However, onboarding is still an onboarding. It demands clear documentation, instruction, and introductions to be efficient and not last a long time. Otherwise, you risk wasting the resources of your augmented developers during these first weeks.
Need in top-notch project management
For some companies, internal project management will generate more challenges. With staff augmentation, your managers need not only to manage your in-house team but also augmented developers and ensure that these two entities are synchronized and enhance each other instead of creating additional problems.
Dependency on a third-party company
Cooperation with any software vendor brings additional risks, from unplanned expenses to sensitive data leaks. There is always a chance that something might go wrong, but usually, finding a trusted partner would be a good prevention for the majority of accidents.
Lack of internal knowledge
Some projects demand the development team have historical knowledge of the processes, previous achievements, etc. Their lack might lead to mistakes, and developers would need to go back and spend their valuable time fixing them instead of moving forward. However, with the right onboarding and adequate communication within the team, you would be able to fill this gap rapidly.
All you need to know about a dedicated team model
A dedicated team is a project outsourcing model, which implies the next approach: the vendor provides the client with a team of specialists required to deliver the project, and both parties share the responsibilities for the project’s success.
Usually, a dedicated team includes not only developers but also UI/UX designers, QA engineers, business analysts, DevOps engineers, and other specialists your project might need.
There are two options on how the dedicated team can be managed: either by the manager from the client side or by the vendor’s project managers. We always suggest hiring a PM along with the outsourcing team, as it has proved a much more efficient approach to the development process.
How does dedicated team work
When you hire a dedicated team, you get a full-fledged unit of specialists who work solely on your development project. The administrative expenses and concerns aren’t your responsibility, as the team is remote and employed by the vendor. You just get to cooperate with the specialists and get the most value from their experience without covering office spaces, equipment, healthcare, etc.
Usually, vendors charge you monthly for the work of the dedicated team, and the fee depends on the number of specialists included in the team and their level of involvement (full-time or part-time). Basically, you pay a combined fee for every employee by their hourly rate.
The process of launching with a dedicated team looks the next way.
Pros and cons of the dedicated team model
So, let’s see how this model might solve problems you encounter and what difficulties it might bring to the table as well.
Advantages of dedicated team
Full dedication to your project
The point of the dedicated team is to have a crew of specialists who constantly work on your project, starting from the first steps of the development process. Hence, all team members are fully integrated, not working on the product instead of just delivering code, and thanks to the knowledge accumulation and transfer, they can deliver a product of really high quality.
Flexibility
If you don’t have stable product requirements, or you suspect they might change in the process of development, a dedicated team will be the best and, more importantly, the most cost-effective solution for you. You can pivot the development without significant shifts in your budgeting, and an experienced vendor would have enough expertise and experience to adjust efficiently.
Delegated project management
This model is a solution for companies that don’t have in-house tech experts who would have sufficient skills and knowledge to lead the development team. The vendors’ project managers take care of all operational management over the team while still updating the client on every step of development and discussing and improving the strategies and core decisions.
High speed of development
With the right conditions, a dedicated team can deliver very quickly. As the team dedicates all its efforts to your project over time, it accumulates the project knowledge, which helps to save time. Often, the developers have already worked with each other on other projects. Hence, they might not need a lot of time to synchronize and ramp up, which would be another benefit for you.
Disadvantages of dedicated team
Communication between the client and vendor’s team
The team is doing the work, but you still need to stay on the same page to ensure the project follows the right direction. However, communication might become a challenge, as two different companies need to find a way to synchronize easily and transparently. Without this, you have a pretty big risk of failure.
Possibility of long kickoff
You might need to wait for the vendor to assemble the team you need: some developers might be finishing their previous projects, or the vendor would hire specialists specially for your project. In any case, it might take some time to start the project. However, while the team is being assembled, the vendor can prepare the necessary documentation and plans for the project to use this period efficiently.
The ambiguity of the estimation
While you can get a pretty precise estimation of your monthly check, you won’t get the same with the final price. It depends a lot on the duration of the project, which might vary due to changes in priorities, requirements, and scope of work.
Risks of cooperation with a third-party
In this model, the dependence on the vendor is pretty high, so a lot of additional financial, security and quality risks arise. You should understand that anything might happen, prepare mitigation plans for possible scenarios, and discuss them with your vendor.
Staff augmentation or dedicated team: what to choose for your project
So, now you know the specifics and differences between staff augmentation and a dedicated team. However, that is not all: we will also explain how to understand what model would be the most suitable for your case.
Altamira as your software development partner
Altamira has wide experience providing software development services to businesses in different industries using different cooperation models. For a decade, we worked hard to deliver a quality product to the clients who put their trust in us. These experiences allowed us to sharpen our delivery approach to maximize the value for you.
Cooperating with us, you get:
Our staff augmentation services
Use our staff augmentation services to enhance the capacities of your existing team. Our specialists are ready to join your crew through team augmentation and contribute their expertise to your project.
Augment your team with:
Our dedicated team services
Need a synchronized and strong team to deliver a software solution to your team? Choose our dedicated team for these purposes. Our approach and capacities allow providing you with quick time-to-market without sacrificing the essential quality of the product.
We specialize in the next industries:
In conclusion
It is impossible to say what is best in general: staff augmentation and project outsourcing with a dedicated team. However, it is possible to choose the model that suits your case the most. If you have any doubts regarding this question, feel free to contact us: we would gladly help you navigate the world of different cooperation models and select the one for you.
FAQ
Staff augmentation implies that the vendor provides you with employees who are integrated into your in-house team that is managed by your managers. Outsourcing implies that the scope is delegated to the vendor who manages and completes the process.
Outsourcing refers to contracting entire business processes, projects, or functions to an external provider, who takes ownership of the outcomes.
Resource augmentation is similar to staff augmentation, where you bring in external professionals to enhance your existing team’s capabilities while you retain management and oversight.
Business process outsourcing (BPO) focuses on outsourcing entire non-core business functions, such as customer support or payroll, to a third party, who takes over full operational responsibility.
Staff augmentation is about temporarily filling specific skill gaps within your existing team by hiring external professionals who work under your management.
Staffing involves hiring individuals, either temporarily or permanently, to join your company’s workforce under your supervision.
Outsourcing is the delegation of entire projects or business processes to an external organization, which takes responsibility for delivering the final product or service, often with little direct oversight from your internal team.
