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What Is Staff Augmentation? Key Benefits and Best Practices

What is Staff Augmentation

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Key Takeaways

  1. When an organization needs access to skilled talent to support current teams, staff augmentation can be the solution. 
  2. Staff augmentation comes in multiple forms including the use of staffing agencies, independent contractors and EOR companies.

  3. It’s important to recognize the signs that staff augmentation may be a solution to employee skill and knowledge shortages. 

Many organizations are finding it difficult to hire great talent at the moment. This is due to historically low unemployment, the popularity of job-hopping, and the rapid advancement of technology that requires new skills. These factors create a job market that lacks enough candidates to fill open roles in speciality and high-demand roles. According to a Forbes article, Gartner found that, “50% of organizations think the competition for talent is likely to increase.” Additionally, candidates are more selective about whom they work for, with a growing number preferring remote jobs and those that offer better work-life balance.

Economic challenges hinder recruitment efforts, as companies try to remain competitive, but have limited recruitment budgets. Stable projects are a thing of the past, necessitating a more flexible staffing model. In an effort to maintain adequate workers to keep the business growing, many have turned to staff augmentation as a solution

What is Staff Augmentation?

Staff augmentation is about utilizing the services of external talent to enhance an existing team. Staff augmentation can range from the use of freelancers and independent contractors to those who are represented by a third-party recruitment firm or agency. In most cases, staff augmentation includes some type of agreement or contract between the talent and the company, and as needed, the third-party entity. The work can be short-term or long-term, temporary, temporary to hire, or as needed by the company. 

Choices in Staff Augmentation Models

When it comes to staff augmentation models, there are several choices to consider. Each has its own terms and requirements in order to make this a successful experience for both parties. Here is a brief list of the most common staff augmentation models,along with their potential pros and cons.

1. Staffing Agencies 

From small specialized boutiques and consultants to larger staffing agencies and groups, staffing agencies can provide access to vetted individuals for temporary or temp to perm assignments. They can vary in the type of staff augmentation and the talent they represent, but they do much of the heavy lifting associated with hiring. They generally handle the sourcing, initial interviews, hiring paperwork, payroll, benefits, and termination  – with other aspects being their clients’ responsibility (in-depth interviews, onboarding, training, monitoring progress, and more). 

2. Online Freelance/Gig Platforms

In this staff augmentation model, hiring managers must advertise for and search on specialized websites for suitable candidates who are seeking work completed on a freelance basis. Once they receive interest from candidates who meet their requirements, they can contact them and invite them to a screening interview or project review meeting. The freelance and gig work trend is expected to increase, with active freelancers in the US increasing to 76.4 million in 2024. 

In most cases, there is a nominal fee for a subscription or pay by job posting that the organization pays for access to these candidates. They pay the freelance/gig company for the services rendered, paying the selected individual a large percentage of their earnings, after taking 10-20% of the agreed upon rate. The organization is responsible for all onboarding and training of the freelancer. 

3. Independent Contractors 

Adding skilled talent to your workforce can occur by contracting with professionals who have the skills you need for your organization. Utilizing the services of independent contractors who may or may not operate their own business or have a track record of success in similar roles and projects can be favorable for your needs. You may also consider employees who are transitioning out of the company or have recently retired or resigned from your company. They have the knowledge and skills you need and can easily be brought on for temporary or longer-term projects (if they are available). 

Companies can connect with potential contractors, then after interviewing them, create an agreement on work to be performed, dates and length of project, expected goals, the contractor’s rate, and more. 

4. Employers of Record

Employer of Record companies are international HR companies that specialize in hiring employees internationally. Like a staffing agency, they can often source staff for client companies. The differences is that the EOR company remains the legal employer of all employees in the overseas location. The benefit of an EOR service is that it is a fully legally compliant staff augmentation solution. The only potential downside is that, depending on the country of hire, it may be more expensive than hiring a contractor or freelancer. 

Benefits of Staff Augmentation

If an organization is in need of skilled or specialized labor to complete an important project or fill in the skills gaps present in the current team, here are some reasons why staff augmentation can benefit any organization. 

1. Time Saving

Finding the right talent is a real time-suck. Some have estimated it taking 20-30 hours per week just to find one amazing candidate. This involves gaining the attention of the right candidates through advertising and recruitment branding, screening the onslaught of resumes, creating a short-list of candidates, assessing their skills, interviewing them, checking references, requesting background checks, drug testing, getting input from the team, deciding whom to hire, processing employment paperwork, and more. Staff augmentation solutions can take on most of these upfront tasks, plus they are furnishing the best talent for the organization. This significantly shaves time off the search for desired talent. 

2. Access to Quality Talent 

Placing a job advertisement and then hoping for the best is not a good technique for finding the talent. There are many candidates who will apply for any position, even though they are not qualified. Networking in recruitment is a hit or miss activity. It can take weeks and even months to locate a suitable candidate. Instead, staff augmentation can provide faster access to quality talent. They have already done all the footwork and have skilled professionals with the experience and knowledge ready to get the job done. They’ve proven their skills through assessments, been carefully vetted, and have successfully completed work for others. 

3. Flexible and Scalable

In agile work environments, businesses must maintain teams that can keep pace with innovations and client demands. Work often fluctuates, which needs a flexible workforce solution. The benefit of staff augmentation is having access to skilled talent who are adaptable and are a good fit for projects, whether short term or longer. This can also support the scalability of the organization as it can add new staff as needed or when it’s a peak time for work. 

4. Cost Savings 

Staff augmentation options can help reduce costs associated with direct hires vs. a contingent workforce. The Society for Human Resource Management (SHRM) shared that it can cost as much as $4,700 for a single employee, and for a specialist that can double and even triple. While the initial hourly rate may be higher for augmented staff than internal employees, consider that it actually costs employers around 23% of an employee’s salary in Social Security and FICA taxes. 

Then there are the added costs of providing benefits, retirement savings matching, office space and equipment, onboarding, and professional development. If the employee leaves voluntary or involuntary, costs for administrative tasks and unemployment benefits can stack up. Many staff augmentation models can offset these costs by handing upfront recruitment and hiring costs, benefits, payroll, and more. 

5. Transparency 

Using staff augmentation is also a transparent experience; there are no surprises! The staffing solution will furnish all terms in writing, address expectations, and in many cases have additional talent ready at your request. Expect talent that has been carefully vetted for quality, skills, culture fit, and suitability for the project. Then there are the payment models offered, which can include:

  • Hourly fee model – Payment is made at a seat hourly rate for actual time worked. Time is tracked and verified for accuracy, then approved by the company.
  • Fixed price model – The augmented staffer agrees to work for a set amount, which can include project milestones paid as completed, or one lump sum at the full completion of the project. 
  • Retainer model – The organization pays a flat rate on a periodic basis (weely, bi-weekly, or monthly), and the contingent worker agrees to work a certain amount of hours and complete specific tasks (tracking and updating the organizational supervisor). 

Signs Your Organization is Ready for Staff Augmentation

After reviewing the staff augmentation models and discovering the different choices you have, along with the benefits, you may be thinking about this as a solution to your workforce needs. This is the first sign that your organization is ready to explore the best staff augmentation solution. More signs can include:

  • An important client has requested a project that the current team is not able to handle.
  • The organization has identified critical skill gaps and there’s no time or resources to train.
  • A vital team member is leaving the company with no replacement available.
  • There are tasks that could be completed by a contractor or freelancer.
  • The company is growing its international team and implementing more remote workers. 
  • HR resources are limited, and the time and cost of hiring have become unreasonable. 

Choosing to use staff augmentation may be the solution needed to solve these issues. It’s important to choose the best augmentation method to meet your organizational goals, whether in the short-term or for long-term sustainability. Depending on the type of talent needed, connect with and talk with a handful of staff augmentation agencies and consider freelance and gig workers, along with contractors to find the right fit. 

Are you Ready for Staff Augmentation?

Staff augmentation is an option that many organizations choose to maintain a capable workforce. Changes and challenges in the current candidate market require flexibility, and time and cost effective solutions. The importance of choosing the right staff augmentation and the benefits it can provide to your company should make better sense. 

To find out how Horizons can help you with international staff augmentation, get in touch with our international hiring experts.

Frequently Asked Questions

Under a staff augmentation agreement, there is no requirement to hire anyone. In some cases, the organization may like the staffer’s work so much that they’d like to offer permanent employment. Some staff augmentation models (staffing agencies and online freelance/gig services) may require that the terms of any agreements be met first, or the organization can “buy-out” the remainder of the staffer’s contract. 

A PEO takes over as the legal employer of a company’s workforce. As well as managing payroll, tax withholding, HR and compliance, the PEO becomes legally responsible for those matters. 

By contrast, a payroll company is an outsourced payroll processing provider. They process the payroll as a service provider for a client company, but do not take on any legal responsibilities or liabilities. 

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