Staff augmentation can be a boon for companies, but unfortunately, most lack awareness of the different available models and how to choose the best one. Fortunately, at Works, we have started from a perfect point to educate on this matter.
In today’s business landscape, the use of temporary labour has gained immense popularity, much like the early days when managers from other departments filled in for absent employees. Nowadays, businesses can choose from various types of contingent labour, with staff augmentation emerging as the most widespread.
Staff augmentation involves recruiting temporary workers from external sources to cater to an upsurge in demand for your business.
There are various scenarios in which businesses can utilize staff augmentation, including:
To satisfy the growing requirements of our regular business activities, such as project work, production, customer demand, and seasonal businesses, we are planning to expand our workforce.
Opportunity for Employment
As a short-term solution until a full-time staff is hired (for instance, for a new location, a new business line, and so forth) for extended projects.
Whenever it becomes essential to engage expert personnel from external sources for brief assignments, such as creating logos and branding, configuring technology, or setting up facilities,
Form a team or group consisting essentially of contractors to gain a competitive edge in the market, which can lead to faster product launches and greater skill-based flexibility.
The staff augmentation phenomenon is quite widespread as evidenced by the projected annual expenditure of $490 billion in the global staffing market. Freelancing, which has existed in society for centuries but has grown extensively due to the emergence of global freelance platforms, is yet another source of talent for staff augmentation. Presently, freelancers already constitute 34% of the US workforce, and this proportion is expected to rise considerably in the next decade.
Advantages and Disadvantages of Staff Augmentation
When evaluating any management strategy, it is crucial to assess the pros and cons. Therefore, it is imperative that recruitment managers and project managers examine their choices meticulously and determine if staff augmentation is indeed the most appropriate approach for their specific scenarios. The table below can offer valuable insights into this decision-making process.
- An accomplished augmentation team can quickly grasp the specifics of a project and start making meaningful contributions.
- Instead of filling vacant positions with unskilled candidates, companies could bring in experts on a per-project basis.
- Can balance out the peaks and valleys of a company’s growth trajectory.
- Amidst the 2007-2009 crisis, Toyota witnessed a decrease in their permanent staff and declared their intention to double their proportion of contingent employees, from 10 to 20 percent.
- Create a safety cushion that can help them evade layoffs in the future.
- Capability to expand or downsize the workforce based on changing business requirements.
- By opting for staff augmentation, companies can explore the possibility of new hires with relatively less financial risk.
- Acquiring a thorough comprehension of the institutional framework may be vital for certain assignments. In these situations, staff augmentation may lead to a significant increase in working hours.
- The cost and time involved in reaching full capacity.
- This may not be the optimal choice for projects with a long timeline or for maintaining frequently utilized skills.
- For example, if a project is slated to run for more than two years, the risk of increased employee turnover rises significantly.
- a particular time frame
- The growing dependence on external sources for talent can pose a possible challenge to long-term strategy.
Factors to Consider when Augmenting Staff
Having an awareness of the different types of staff augmentation is crucial when considering it.
- Reliable employees are more important than any particular skill sets when it comes to accomplishing a task.
- Manual work, customer service, stocking products, and welcoming guests at events are all instances of “entry-level” roles in the workplace.
- It is necessary to have typing skills, experience working with spreadsheets, and familiarity with multiple languages, although the proficiency level is not crucial.
- Tasks such as administrative duties, data entry, transcription, and simple writing assignments.
- You require advanced skills, which can only be acquired through extensive practice and study.
- Fields such as computer science, legal contract drafting, and logo design.
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Enriching Services for Staff Augmentation
There is a diverse range of choices available when seeking to employ staff augmentation specialists. When making your final selection, it is crucial to take into account the specific requirements of your organisation.
Conventional Employment Agencies
- Job-Temps: Pioneers of the Staffing Industry
- Both Skills-Based and Commodity-Based Talent Forms are Considered.
- For projects that do not require perfection or extensive expertise, non-critical projects are the ideal solution.
- Skills: Flexibility
- Issues: Difficulty in finding highly skilled workers.
- Companies such as TEKsystems, Experis, and Adecco are a few illustrations.
Employment Agencies that Collaborate with Multiple Suppliers
- In-depth explanation of vast employment initiatives managed by a single company
- Commodity Skills
- Perfect for scenarios where the primary considerations are cost and quantity of staff
- Competitive Benefits Comprise of Economical Price and Extensive Scope.
- Issues: The consistency of highly commoditized skills may vary.
- Manpower, Kelly, Aerotek, and Randstad are some widely recognized illustrations.
Skilled Employment Agencies and Freelance Consultants
- Description: boutiques and agencies specialized in highly-skilled and talented workforce
- Skills-Based and Exceptionally Skilled Workers.
- Occasions when an advanced level of proficiency and specialized knowledge is needed
- Benefits: Top-Quality
- Issues: Costs can be high and upkeep expenses can be significant.
- Two examples are PointB and Patina Solutions.
Examples of Gig Economy
- Here are some websites that simplify the process of discovering and employing freelancers quickly.
- Commoditized and Skills-Based Workers
- The optimal scenario includes task-specific necessities for comparatively broad skill sets.
- Outstanding Features: Agility and Flexibility
- Issues: With massive markets, distinguishing between candidates can be difficult, and elite talent often spans across the world.
- Only a few examples are Upwork, Freelancer.com, and Works.
On-Demand Talent Platforms
- The following are platforms accessible on the internet that have pre-vetted professionals.
- Skills: Exceptional Aptitudes
- Outstanding for promptly deploying highly skilled personnel
- Benefits: Speed, Flexibility, and Excellence
- Challenges: Talent is not always concentrated in a single location (remote work)
- Particularly: Works, Works
Direct Independent Connections
- We describe freelancers who are directly hired by companies.
- Various Talent Categories: Based on Skill, Highly Skilled
- When reliable professionals are accessible to meet your requirements.
- Advantages: Stringent Quality, Reduced Costs
- Discovering reliable individuals and maintaining a relationship with them can be demanding.
- Websites such as TalentNet and WorkMarket are two relevant examples.
Choosing the Right Approach to Expand Your Workforce
Many enterprises rely on multiple suppliers to achieve their objectives and priorities. When it comes to staff augmentation, it’s crucial to weigh all variables. For instance, making decisions based solely on cost may not be ideal when looking for a machine learning specialist, who is currently high in demand. On the other hand, hiring workers solely based on their skillset may not be appropriate if a significant number of workers are required to complete a task that can be easily taught. There are numerous workforce augmentation methods to consider, thus it’s essential to thoroughly assess all options.
When is Staff Augmentation a Viable Option? Three Factors to Consider and Three Common Misunderstandings
Consider the Project’s Overall Duration.
Staff augmentation can be advantageous for organisations, particularly for brief projects. However, it may not be the best choice for those seeking temporary employees for extended periods. Outsourcing may be a more appropriate solution in such circumstances. Fortunately, staff augmentation service providers are frequently willing to negotiate terms to meet these requirements.
Confidentiality Is the Second Factor to Consider
In certain covert operations, intellectual property (IP) is critical. In such situations, it’s important to carefully evaluate staff augmentation alternatives. However, decisions are often taken based on intuition rather than evidence. As a result, agreements with freelancers and independent contractors should be approached with the same level of care as traditional employment contracts. For example, a subcontractor who had previously worked for a well-known services provider and is currently residing in Russia was responsible for one of the most infamous data breaches in history. As a result, organisations should exercise caution and perform due diligence when introducing new personnel to classified projects.
Startup Time is the Third Factor to Consider
The majority of businesses lack efficient procedures for managing their contract labour (refer to graph below). Misunderstandings based on context may be a cause of this.
When it comes to managing their contingent workforce, many businesses have much room for improvement.
In a business environment, having a grasp of the bigger picture can be advantageous. It’s crucial to consider the amount of time required for a worker to gain this level of understanding when evaluating a situation. Staff augmentation may not be the best strategy for highly intricate projects that require an extended ramp-up period, though this can be influenced by the competency level of the augmented staff.
This case study of a major semiconductor company illustrates how complexity can raise staffing expenses. By investing in the appropriate context, the company was able to reduce their budget by nearly half, avoiding months of wasteful spending.
One Common Misconception Pertains to Using Temporary Workers as a Cost-Saving Measure.
Numerous business owners and executives may assume that they can lower expenses on employee benefits by employing contract workers rather than permanent employees. However, this is an incorrect assumption since the staffing agency ultimately bears the costs associated with benefits, and this is reflected in the rate charged to clients. As a result, companies may discover that they are spending more on temporary workers when hiring a permanent employee may have been more cost-effective.
Second Misconception: Increasing the Existing Workforce Raises Expenses.
It is a common misconception that temporary workers are more costly than permanent staff. Nevertheless, this isn’t always accurate, and many business owners make this mistake when computing labour costs. While a temporary worker might be billed at a higher hourly rate of $50, it does not necessarily imply that hiring a permanent employee would be a more cost-efficient option.
Hiring a full-time employee on a yearly salary of $100,000 can have a significant impact, with the average global retention cost being 23%. This figure can climb to 30-50% in certain countries when considering the cost of benefits like medical insurance, 401(k) matching, and salary-contributory pension plans, as well as the cost of ongoing employee training. In light of these expenses, augmenting the workforce through contracts can be viewed as a cost-effective option.
Third Misconception: Managed Services versus Additional Staff
The recruitment industry has introduced several new terminologies that can often be mistaken for one another. This is the primary cause of the prevalent confusion between staff augmentation and a related strategy, managed services.
Unlike staff augmentation, which involves hiring individuals to meet a specific job description and paying them based on the time and materials used, managed services prioritize delivering a specific outcome, which may or may not be subject to a quality rating. For example, a company may hire an additional worker on an hourly basis to develop code for a custom application that is uncommon to the firm. In this scenario, a managed service provider would be enlisted to develop the application with pre-determined key performance indicators in mind and compensated upon successful completion.
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Personnel Augmentation: A Holistic Approach
Businesses are progressively embracing staff augmentation to better address the ever-changing demands of the industry. Its application is evident across a variety of sectors and professions, from research and development to operations, human resources, finance, and more (as shown in the figure below). Augmented employees hold significant importance for companies both currently and in the future, as exemplified by industry giants like Google, who acquired a freelance/contract data scientist network known as Kaggle in 2023.