Build or borrow? What is Staff Augmentation?

How to grow your digital capabilities and extend your team?

Perhaps creating websites and apps is already your core business; or perhaps you are increasingly being asked to do digital work by your clients. Either way, marketing, digital and creative agencies of all kinds must think through how best to grow their digital capabilities as they grow their overall business. So, is it better to build a team, or just borrow one? Let’s take a look at staff augmentation model vs. an in-house team, or a freelancer.

Build your own team?

Building your own team gives you complete control. This is not just over how you go about building it, but also how it operates. Naturally, you yourself (perhaps with your business partners) need the right skill sets to get started with this route: some technical, some managerial. 

Next, you have to be good at attracting and nurturing the right kinds of talent. What’s more, you’ll likely need to keep growing your business to hold on to that talent. Since they themselves surely will continue to grow. The challenge in doing so is considerable.

Commercially speaking, this route certainly requires significant investment. Consider all the costs beyond merely the salaries that we associate with building and running a team; hiring, training, HR, legal, re-hiring, office overheads, and designing and maintaining all the necessary operating processes.

These are significant efforts and costs indeed. They will vie for priority with other activities that could deliver more value to your clients, like your strategic insights, your creativity and your perspectives. The flip-side of that full control, then, is that you’re also responsible (cost, effort) for doing all the things you need to do to achieve a quality output.

Borrow by means of staff augmentation?

Instead of building your own team, you could simply borrow one. Here we mean to contract for the capabilities you need – either with freelancers or with an outsourcing partner that provide staff augmentation services.

Let’s take a look at each of these in turn.

Working with freelancers

As specialists, freelancers tend to be highly skilled in one or two areas.

There are lots of digital freelancers in the market. Lots of good ones, lots of average ones, and lots of not-so-good ones too. However, very few provide skills in all the areas needed to deliver a digital project.

What this means is that unless your project is very simple indeed, working with freelancers is likely to mean working with several freelancers. Pretty quickly that’s going to start to feel like building a team again.

Even if you can deliver your project with just a single freelancer, you still have the challenge of recruiting them in the first place. How do you sort the good from the not-so-good? And even when you’ve found a good one, you can only hope they’ll be available for subsequent work, or even to support the work they did for you in the first place. They’re a freelancer, after all.

That said, this lack of commitment works in your favour too, as it makes it easier to ensure you’re only ever buying hours that you’re selling on to your client. So, using freelancers helps avoid the dreaded ‘under-utilization’ associated with full-time employees.

Working with an outsourcing partner

Commercially speaking, working with an outsourcing partner is similar to working with a freelancer. You make a contractual commitment for a piece of work. When it’s done, you pay the bill and that’s that.

Operationally speaking, though, it’s really quite different. An outsourcing partner is a whole team, so you don’t need to hire analysts, product managers, developers, QAs or any other specialists separately. And the team works to practice processes already, so you don’t need to worry about implementing those either. This is how it works with staff augmentation.

There are a good number of outsourcing options available, with popular geographies being Europe, Latin America and India. Naturally, you’ll want to choose carefully amongst the many competing offerings, and there is certainly a significant variation in approach, quality and price.

Key themes to consider include how good they are at communicating with you. How accurate they are with their estimates, how consistent with their delivery, and of course the quality of the work and the price. You can often get a good sense of things from reading reviews on platforms like Clutch. Reviewing portfolio work in detail, and asking a lot of detailed questions when meeting potential partners.

Regarding the price, it’s always prudent to consider the Total Cost of Ownership. You may pay X to get your project delivered. But if you’re paying Y over time to correct mistakes, or to make it perform or scale better, then really your total cost is X+Y.

Comparing the costs

Notice that Freelancer fees are high when we compare them to employee salaries. But the right comparison to make is with the total cost of employing someone. You have to add in the overheads.

For a start, there is the ~10%-15% employment costs relating to employer’s NIC and pension contributions. Then there is paid leave, which at 28 days minimum (for the UK – may vary between the countries) represents an additional ~11% cost. There are also a range of overheads associated with providing equipment, hiring, training etc.

Finally, one must consider that employees aren’t always 100% billable. Developers are rarely 100% utilised. Altogether, these considerations can add an additional  ~40-50% cost on top of your employee’s salary.

And while working with an outsourcing company in your country may cost more on an hourly basis than employing someone. Working with an outsourcing company in a different country can offer significant cost savings.

If you want to see how we calculated these figures, give us a shout and we will send you a free calculator.

Are you ready for Staff Augmentation?

If you’re thinking about changing your approach to building your digital capability, or already know you want to start working with a partner, it makes good sense to get things lined up before you suddenly find yourself under pressure to act quickly.

Agency work often has a seasonality to it, with peaks of activity relating to the holiday seasons and your client’s budgeting cycles. Selecting the right outsourcing partner ought to be an considered and involved activity. So that it makes sense to get the right partnership in place before your project activity starts to peak.

In case there are still some doubts schedule a call with me, so that I can explain more on how it works. It doesn’t cost a penny. Book your meeting here.

Thank You for staying unitl the very end.