The IT industry is booming exponentially now more than ever, thanks to technological advancements. According to Statista, the US IT industry alone generates a revenue of more than $380,387 million. Out of this, the IT outsourcing segment is the largest and accounts for more than $131,274 million. By 2026, the whole IT industry is projected to scale $543,074 million by 2026.Due to the rising demand for manpower, the IT industry is consistently looking for talented individuals who can take the industry to new heights. When it comes to the IT industry, the two main facets that govern it are staff augmentation and outsourcing. They are like the pillars that account for maximum activity and give the industry the power it holds.In this ebook, we will discuss how IT staff augmentation and outsourcing help IT magnates around the world, which in return help millions of youth pave the way for their better future.

Why is there a need for staff augmentation and outsourcing?

Let’s be honest– the world is facing cut-throat competition in almost every industry and IT is no exception. If organizations are to make profits and their clients happy, they need to adopt up-to-date methods that are proven to deliver projects in the given time and budget. To meet the deadlines and decrease the cost, organizations often rely on other agencies that solely work as a mediator for IT projects. As a result, there are three possible ways in which companies take the help of third-party agencies, namely:

• Staff augmentation 
• Outsourcing
• Hybrid approach

IT staff augmentation

It literally translates to increasing the staff size. It is meant to bridge the skill gap that’s persistent in an organization. What companies do is contact talented personnel without the need for actually hiring them. They can either be temporary or permanent employees, irrespective of the distance. It is becoming so popular each year that even small and medium-scale IT companies are reaping their benefits. 

What is staff augmentation?
Staff augmentation clearly requires an external service provider (on a contractual basis). This is done in order to save time and complement the already existing team without devoting much time or resources to it. Since the service provider handles everything from selecting the individuals to managing them, it becomes easier for organizations to actually deliver their 100% into a certain project.

How does staff augmentation function?

The main goal of staff augmentation is to get talented individuals having a specific skill set and employ them for the short term, i.e, without any long-term commitment. How does this exactly happen? There are staff augmentation companies that have a database carrying the information of thousands of individuals with the required skill set.When organizations feel the need for extra employees, they contact these agencies and get the desired list of candidates. This is done right after the organization’s need assessment for the desired topic.

When is the right time to choose staff augmentation?
Due to the rising demand in the IT sector, staff augmentation has become quite common and almost every organization knows about its importance as well as significance. If you’re new to this, don’t worry. Here are a few scenarios where you can use staff augmentation:

• A new project has come up that requires the expertise and skills your full-time employees don’t possess. In this case, staff augmentation adds extra value to your workforce and improves efficiency.
• A new project is on the line and the full-time workforce is already engaged or working overtime to complete a different project. To prevent employee burnout, it becomes mandatory to hire extra people for some time. This is when staff augmentation comes into action. 
• If there is a considerable skill gap and the current employees don’t have the expertise to take up the project, it is best to consider staff augmentation. This becomes more functional when the requirement is sporadic which is just perfect to meet temporary requirements.
• When the organization has to deliver an important project within a given time. Instead of panicking, you should go for staff augmentation. It is affordable, time saving, and the best solution when there’s no way out. 
• When an organization is running short of budget to hire full-time employees or the workforce isn’t enough to take up multiple projects at the same time.  
• Last but not the least, the organization requires a certain level of flexibility to handle projects. This flexibility can only be achieved with the right number of personnel engaged with a project.

What are the benefits of choosing IT staff augmentation?

If you have come this far, chances are you are still confused regarding the real advantage staff augmentation has to offer. This is the right time to clear all your confusion. On a serious note, staff augmentation helps an organization with things like-

1. Division of workload

The more the merrier. This saying literally fits right here. With more individuals working on a project, it gets less hectic. There is the right division of labor, and with more people, there is more creativity, flexibility, less time consumption, etc.

2. Gentle on the budget

There are times when even the most profitable organizations run out of sufficient budget. To tackle this, staff augmentation offers low cost labor with no compromisation of quality. It cuts the chase and helps get rid of time-consuming steps involved in the formal hiring process (thereby cutting the costs). As a result, there is a cost reduction in recruitment, onboarding, background formalities, and so on. 

3. Higher scalability

With staff augmentation, it becomes easier for organizations to make significant changes and improvements without thinking about the requirements and consequences.

4. Independent of geographical limitations

Ever since the pandemic has shattered the whole world, more organizations offer work from home to their employees. The same happens in the case of staff augmentation. It overlooks the geographical boundaries and focuses solely on the talent, thereby allowing individuals from around the world to work together. This yields better results and makes employees more flexible.

5. Significant cost reduction 

This is one of the reasons why IT companies are relying more on staff augmentation. It helps to significantly reduce the costs that are otherwise required in things like infrastructure, onboarding, and other formalities related to hiring full time employees. It offers a great alternative to organizations when they need a quick fix. In the coming years, staff augmentation is going to become even bigger.

Outsourcing

According to Investopedia, in simple words, outsourcing is the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company’s own employees and staff. Outsourcing is a practice usually undertaken by companies as a cost-cutting measure. Outsourcing comes with a certain level of autonomy as it involves hiring a whole team for a specific task. There is no intermingling between the full time employees and the allotted team.

How exactly does outsourcing work?

If we bifurcate the term outsourcing, it comes from two words– ‘out’ and ‘source’. It literally means sourcing a given task to an outside entity. There are agencies that specialize in helping organizations with a dedicated team. Both parties sign a contract and abide by the rules before doing the actual work. Think of the agency as a paid partner with similar goals and interests. In exchange for money, these agencies take responsibility for everything from handling responsibilities to delivering the work on time. As a result, organizations are able to get the desired results without spending a fortune on individual services. 

When can organizations use outsourcing?

With the help of outsourcing, organizations and small brands have been able to work with a pool of talented teams around the globe. It is an effective method that companies often adapt to get things done quickly. Over the years, outsourcing has become the go-to for small and large scale IT companies likewise. There are numerous reasons why your organization should choose outsourcing, like–

1. To help focus on the primary business values

Sometimes, the work beyond the expertise of regular employees stresses everyone out. Outsourcing the work to the right team significantly helps the workforce focus on the issues they are experts in. This helps in a smooth workflow and gives better clarity to everyone. Therefore, outsourcing removes the truckload of responsibility and favors better management. 

2. To substantially decrease the additional costs

The best thing about outsourcing is that it cuts down the additional cost to a significant percentage. You can hire an off-shore team (teams outside the country) to cut down the mandatory costs. Various IT companies in the United States hire offshore companies based in countries like China, India, Singapore, etc. On one hand, it gives exposure to talented agencies from developing countries, and on the other cuts additional costs for the organization.

3. To mitigate the risk factors

Another important advantage of outsourcing is the factor by which it decreases the risk factors that come with a certain task. In this matter, off-shore outsourcing is particularly helpful as it curbs the risk factors and excludes the need for extra paperwork. 

4. Gives access to world class skills

Believe it or not, the motive of most organizations behind outsourcing their projects isn’t the lack of sufficient budget but the fact that outsourcing helps them add more value to their tasks, without adding an additional cost to it. If they can kill two birds with one arrow, why choose something else?

Now that you know when and why organizations opt outsourcing, it’s the right time to know the advantages associated with it.

The advantages of choosing the outsourcing

1. Improvement in the in-house efficiency

Outsourcing is basically the division of labor and it helps the in-house teams to a great extent. It is like a boon for in-house employees as they have less workload to take care of. This in turn creates a stress-free working environment. Research shows that a decrease in work-related stress helps boost both the productivity and creativity of employees. 

2. Better risk management

Sharing the workload means sharing the potential risks that are associated with it. With each project, there is some involved risk and outsourcing divides the risk between the organization and the agency. 

3. Round-the-clock assistance

In Western countries, working during the non-office hours is considered illegal and isn’t the common practice as well. It is just the opposite in various Asian countries. Therefore, outsourcing your work to a company means round the clock assistance. This is done to compensate for the time difference as well. 

4. Provides competitive advantage to the business

Another great thing about outsourcing is the competitive advantage it gives to the company among its competitors. This is one of the reasons why various organizations go for outsourcing. 

5. Improves the networking

This is an obvious advantage that comes with outsourcing. Since outsourcing isn’t bound geographically, it offers a great opportunity for agencies around the world to collaborate with organizations looking for help. This not only establishes a long-term relationship between the agency and organization but also between the employees as well.Staff augmentation and outsourcing both offer a great advantage to the IT companies and will continue to do so in the coming decades. Both of them are unique in their approach. Nowadays, most IT companies are using a mixture of both. This is called the hybrid approach and it is the lovechild of staff augmentation and outsourcing. Let’s know about the hybrid approach in detail.

Hybrid approach

No two organizations are the same, and therefore their requirements are different. The hybrid approach aims to make the best out of both approaches and adjusts according to the needs of individual organizations. As complicated as it sounds, the hybrid approach is pretty easy when implemented the right way. 

How does the hybrid approach work?

The hybrid approach works by letting an outsourcing provider set a remote team for them. The outsourcing agency takes the task of screening and hiring the individuals along with other essentials altogether. This sets up a new branch that works closely with the company without the need to be physically present for the interview and other formalities. 

When should organizations opt for the hybrid approach?

The need for a hybrid approach arises when businesses find it difficult to choose between staff augmentation and outsourcing. It should be chosen when-

• The organization has a shortage of skilled personnel to handle the ongoing projects. 
• The management is facing problems associated with the finance and still doesn’t want to compromise the project quality. 
• The organization needs benefits of both outsourcing and staff augmentation at the same time.

What are the advantages of using the hybrid approach?

The hybrid approach has been introduced for a good reason. It provides certain advantages that staff augmentation and outsourcing individually can’t. Here are some of the undeniable advantages of the hybrid approach.

• The hybrid approach gives access to a larger pool of talent. With this pool, organizations can basically achieve anything they want. 
• Since all the work is assigned to a thief party, there is no involvement of Human Resource personnel, administration support, and other staff concerned with the onboarding of new employees. 
• The hybrid approach is economic as well. It saves a great deal of money that would otherwise have been spent on office space, employee management, onboarding, and other stuff. 

Conclusion

Staff augmentation, outsourcing, and the hybrid approach are amazing ways to collaborate with other agencies and cut down additional business costs. This helps businesses not only flourish but also scale at unprecedented heights. You can also choose any of these approaches for your organization’s success. However, it is important to analyze your organization’s needs and requirements first. It will make sure you choose the best out of the three ways. Once you have surpassed this step, you’re good to go.