“Bet on people, not strategies.”
AlliedSignal’s former CEO Lawrence Bossidy’s above quote comes with a lot of experience in problem-solving. The field of Information Technology demands recruiters, sources and their teams to constantly implement novel solutions to recurring problems. People, and for that matter, the right people are the heart of any great IT company.
People are responsible for delivering projects on time and delivering quality. This is why an IT company is often caught up in the permutations and combinations of IT outsourcing services, staff augmentation or a hybrid approach to deliver quality and time.
Technologies are always changing and customers are always evolving. As a result, an IT company needs to have a team that can easily blend with outside teams in order to create software solutions that last. In fact, it is hard to find businesses with static needs because consumer data is growing every day.
This is why today IT companies are faced with the decision of selecting one or two of the following delivery models:
- Staff augmentation
- IT outsourcing services
- Hybrid approach
Let us now examine each one of these models to understand which one may suit your requirements better.
Staff Augmentation or Augment Staffing
When a company hires outside personnel temporarily to augment its capacity, it is termed workforce augmentation. Such a company takes the help of other companies offering staff augmentation services that allow them to add or reduce staff as per skills. There can be many reasons for choosing an IT resource augmentation model for fulfilling IT projects.
The following are the most common scenarios for opting for this model:
| Increased capacity | Spikes in customer demand, increased production, seasonal businesses, etc,. lead to an increase in the demand for personnel. |
| Specialized skills | Specialized skills such as brand and logo design technology or facilities are needed for a while. |
| Change in strategy | When the strategy changes in terms of a more agile strategy in terms of core skills point of view or projects with faster time to market. |
| Bridge to hire | As a bridge to hire capacity while you hire a permanent team for long- term needs. |
Pros and cons of Staff Augmentation
| Pros | Cons |
| Companies do not need to hire new employees, they can hire staff based on a per-project basis. | Not suitable in case of ongoing skills needs or long-term projects. |
| Staff, hired from staff augmentation services, are usually competent and can quickly slip into your shoes. | May hinder sustainability plans because augment staffing involves dependence on third-party organizations. |
| Can be a great way to do a trial-run for competent future employees | Not suitable for projects that require institutional or contextual knowledge. |
| One can increase and decrease staff based on needs or demands. |
Project Outsourcing or IT Outsourcing services
An IT outsource company provides staff for an entire project. That means sometimes companies need to execute a whole IT project by using the resources of a third-party provider. However, this is not limited to an entire project, but includes specific tasks of a project that are outsourced, mostly overseas.
This is a more specialized form of cost-effective staffing because it limits the hiring to just getting the job done by a specialized set of professionals. Companies may focus on their core operations while hiring the skills or expertise of professionals hired through outsourcing. There are many benefits of IT outsourcing services, but before that, let us discuss when you may need them.
When do companies need IT Outsourcing exactly?
| Better use of external resources | Companies want their in-house employees to focus more on other productive tasks, so they delegate some of their business processes to an IT outsource company. |
| Accelerate business processes | Sometimes, IT support outsourcing is needed to accelerate business processes that mundane or time-consuming. |
| Share risks | Delegating a part of non-focus functionality by outsourcing it to a third-party vendor, with the purpose of giving away the responsibility and related risks. |
| Access to overseas skills | For getting access to skills that are not available as per the need locally. |
Pros and cons of IT Outsourcing
| Pros | Cons |
| An outsourced IT company saves time invested in advertising, interviewing, recruiting and training in-house team members. | An overseas IT outsource company may have significant time differences that may hinder communication or progress. |
| Outsourcing to a company with a lower production cost leads to overall cost reduction and better ROI. | Many outsourcing teams located outside your home country may suffer from language barriers. |
| IT outsourcing gives you access to a global pool of talented professionals. | Cultural differences and different work habits also take a long time to adjust for many companies. |
| IT outsource services pave the way for companies to onboard new domains and clients. |
Hybrid Approach
As we established earlier, companies today rarely have static businesses. Most IT companies have been evolving needs and hence they need a combination of staff augmentation services and IT outsource services.
In such a scenario, IT staff augmentation and project outsourcing are blended in a way so as to meet the specific needs of the project.
In short, a hybrid approach combines the benefits of IT staff augmentation and IT outsourcing.
When do you know you may need a hybrid approach?
You may have a project that’s moving towards the finish line, but there are stages where IT staff augmentation is required to bring in some specific knowledge. At the same time, you may have another IT development phase where you feel you need an outsourced IT team to work on the project separately. This may help the internal departments immensely while the projects are delivered on time.
Pros and cons of the hybrid approach
| Pros | Cons |
| Team cost is recurring from month to month, so you have full predictability. | It may require an additional project manager/offshore manager to manage a variety of teams within the system. |
| Access to a pool of global talent that’s specialized and rare, and you can choose this based on projects. | The instability of costing can turn out to be expensive in the long run. |
| No need to extend office space to house more people in your team in case of offshore outsourcing. | |
| You can offload team setup and accelerate work by outsourcing to a 3rd party. |
Famous companies using Hybrid models
There are companies such as Salesforce, Google, Amazon and Facebook that have successfully benefited from the hybrid model of staffing and hiring. Hybrid models have become more relevant especially after the pandemic because remote working is the new normal. A Forbes article reported that Google CEO Sundar Pichai had called for a “hybrid work-from-home model” in September 2020.
Conclusion
Outsourcing in general has benefited several businesses post pandemic. Purely offshore or purely onshore models can lead to losing good business opportunities. Software and application development requires an ever-evolving talent that’s updated with the latest technologies and trends.
In-house training can get limited since it also needs trainers to be constantly updated. As a result, instead of spending a lot of time in training the in-house staff or hiring fresh talent in specific domains, a hybrid approach is preferable with a thoughtful mix of staff augmentation and IT outsourcing.
If you are looking to adopt a hybrid model, or need staff augmentation services or IT outsourcing, feel free to contact us.
