In this article, we'll explore the world of staff augmentation in offshore outsourcing, review its key aspects, and learn how to properly integrate new talent into your team to speed up development and improve product quality without losing control of the process. Get ready to experience a world where team flexibility and scalability are key to success in a dynamically changing IT space.
What is Offshore Staff Augmentation?
The meaning of offshore staff augmentation is simple: a company (usually a large one) wishing to concentrate on its core business and not be distracted by various HR problems enters an agreement with an intermediary organization providing it with staff. IT staff provider is legally their employer and solves all issues related to the selection, salary, and registration of subordinates. It also maintains all documentation (accounting and personnel).
In offshore IT staff augmentation, the employees entirely work in the customer's firm but are on the staff of the provider company. Companies mainly use outstaffing with at least 100 employees. The service is also in demand among startups that want to get the specific experts they need for their development without unnecessary delays, which are difficult to find in any other way. The most common types of staff are:
- Secretaries
- Designers
- Translators
- Marketing specialists
- IT developers
The IT staff provider pays salaries and taxes and enforces labor laws (hiring, sick leave, dismissal, and so on). At the same time, the staff spends all their working hours on projects for the client company. The staff is also under the direct management of its managers, which is one of the main differences between nearshore and offshore development and staff outsourcing.
People work in the same way as full-fledged employees on the staff. They perform their usual duties but without unnecessary legal complexities and the risk of costs. If an IT specialist is not suitable, the IT staff provider simply replaces them free of charge so that no one has to be fired.
We recommend you read our article comparing IT staff augmentation vs managed services.
Features of Staff Augmentation in Offshore Outsourcing
Here are six main features of staff augmentation offshore outsourcing.
Flexible Scalability
Offshore IT staff augmentation provides companies with flexibility and scalability in their workforce. Scaling software development teams based on project needs without the hassle of hiring or firing full-time employees.
Access to the Global Talent Pool
Offshore IT staff augmentation enables companies to access a diverse pool of competent professionals with expertise in numerous technologies and domains. This helps them find the right talent for their specific project requirements without being limited by geographical constraints.
Cost Efficiency
Reducing the costs (including time) of hiring and servicing personnel decreases the cost of each person-hour of work for the company's employees. This lowers the cost of production and, as a consequence, increases the organization's actual (non-accounting) profit. That is why IT outstaffing has been successfully practiced in Japan and the USA for more than 50 years.
Software development team augmentation helps you reduce the cost of servicing full-time employees, including office supplies, equipment, software, and consumables. This is especially true for the accounting and human resources departments, which lose some functions. In our practice, small companies often completely eliminate HR. An outstaffer still has a wide enough staff to meet any needs if they arise.
Delegated Non-core Tasks
You can reduce the company's administrative and financial burden while retaining direct management of employees. This is especially important for startups with small IT products, little experience, and large companies that want to reduce some of their managers.
Scalability of Specialized Skills
Offshore cheap staff augmentation facilitates the task of finding valuable personnel. IT staff providers usually already have such employees and value them. MaybeWorks, for example, specializes in seniors and top IT specialists with an extensive knowledge base. Such experts simply cannot be found on the free labor market, and if there is a need for a particular list of skills, you can wait for months. Offshore staff augmentation allows you to solve the problem of attracting specialists in a few days. With such a service, the search for developers is much faster. By the way, specialized skills are now one of the trends in staff augmentation.
Diversity of Approaches and Experience
A personnel contract formalizes the relationship between the offshore IT staff provider and the client firm that needs employees.
All the terms on which the employee is accepted come from the customer. You set their salary and assign the amounts of possible bonuses and compensation. The task of the offshore IT staff provider is to find suitable personnel who can constantly be at his disposal to solve the different needs of the customers. Personnel and accounting records are kept for the employees strictly within the framework of local legislation.
An employment contract is concluded between the IT staff provider and each employee. It can be fixed-term (only for the duration of the agreement on providing personnel to the customer) or indefinite - if the specialist is very valuable and it is assumed that they will be permanently supplied with work.
Need to augment your development team? Turn to MaybeWorks!
Benefits and Challenges of Offshore Staff Augmentation
In this section of our article, we want to discuss the benefits and challenges of staff augmentation.
Offshore Staff Augmentation Benefits
Offshore staff augmentation offers several benefits:
- Faster time to market. By leveraging offshore talent, companies can accelerate their time to market by completing projects quickly. This is principally advantageous for businesses operating in fast-paced industries where speed is essential to maintaining a competitive edge.
- 24/7 operations. Offshore staff augmentation enables round-the-clock operations by leveraging teams in different time zones. This can result in faster project turnaround times and enhanced customer support services.
- Risk mitigation. By diversifying talent sources geographically, companies can mitigate risks associated with local economic downturns, talent shortages, or other unforeseen challenges.
- Cultural diversity and innovation. Offshore teams bring diverse perspectives and ideas to the table, encouraging innovation and creativity within the organization. This cultural diversity can lead to fresh insights and solutions to complex problems.
- Compliance and quality assurance. Reputable offshore staff augmentation providers like MaybeWorks adhere to industry-common regulations and standards, ensuring compliance and quality assurance throughout the project lifecycle.
So, offshore staff augmentation offers a strategic approach for companies to extend their capabilities, drive growth, and remain competitive in today's global business landscape.
Challenges and Risks of Offshore Staff Augmentation
Outstaffing is not just a tax avoidance scheme but an absolutely legal mechanism for optimizing company expenses. Taxes on employees are actually paid by the one who should pay them: the organization where the employee is employed (i.e., the IT staff provider). The amount of taxes is simply included in the expenses incurred by the client company by entering into a contract with the provider.
To avoid accusations, you should enter into a contract only with an experienced and proven organization that provides services to various companies.
Today, in a crisis, it is imperative to be on guard. Many companies are trying to survive by attracting IT outstaffing or personnel leasing clients. At the same time, they lack sufficient experience, legal support, and knowledge of local legislation in personnel management. All this can lead to rather unpleasant consequences for you.
We also recommend you read our article about IT team extension.
Why Companies Choose Offshore IT Staff Augmentation
So, let's recap why companies choose offshore IT staff augmentation:
- Cost-effectiveness. Offshore staff typically demand lower salaries, reducing overall project expenses.
- Access to talent. It allows entrance to a global pool of skilled professionals, overcoming local talent shortages.
- Scalability. Firms can swiftly scale up or down their teams based on project requirements without long-term commitments.
- Time zone advantages. Working across time zones enables round-the-clock productivity and faster project turnaround.
- Focus on core tasks. Outsourcing non-core IT functions frees up internal resources to focus on strategic initiatives.
- Flexibility. Offshore augmentation offers flexibility in hiring specialized expertise for short-term projects or specific tasks.
If you're looking for a reliable IT staff augmentation provider in Ukraine, our MaybeWorks team is ready to help!
Offshore Staff Augmentation Models
When thinking about offshore mobile development staff augmentation, you can choose out of 3 options.
Extended Team Model
This model epitomizes collaboration, seamlessly integrating offshore resources with in-house teams to form a cohesive unit. In this model, offshore professionals function as an extension of the client's team, working closely on projects under the client's direct supervision. This approach fosters synergy, enhances communication, and facilitates knowledge sharing, enabling organizations to scale their capacity while maintaining control over project management and delivery.
Managed Team Model
The managed team model offers a turnkey solution, entrusting the management and oversight of offshore resources to a dedicated service provider. Under this model, the service provider assumes responsibility for recruiting, onboarding, and managing the offshore team, streamlining operations, and alleviating the client's administrative burden. By leveraging the service provider's expertise and infrastructure, organizations can focus on core competencies while benefiting from cost-efficiency, scalability, and operational flexibility.
Custom Solution Development
For organizations with unique requirements or specialized projects, custom solution development offers a tailored approach to offshore staff augmentation. This model emphasizes flexibility and customization, allowing clients to collaborate with service providers to design bespoke solutions aligned with their specific needs and objectives.
Whether it involves niche skill sets, complex technologies, or unconventional project scopes, custom solution development empowers organizations to harness offshore talent to address their most pressing challenges and capitalize on emerging opportunities.
How to Do Offshore Staff Augmentation
Here are the steps you must take to get the maximum out of offshore mobile development staff augmentation.
Define the Requirements of Cooperation
Before embarking on your offshore staff augmentation journey, it's crucial to outline your specific needs and objectives. Identify the skills, expertise, and resources required to achieve your business goals seamlessly. Collaborate with key stakeholders to ensure alignment between your organizational objectives and the augmentation strategy.
Reach Out to Experts Who Can Share Their Experience
Seek insights from industry experts and peers who have successfully implemented offshore staff augmentation. Leverage their experiences to gain valuable insights into best practices, potential challenges, and effective strategies. Engage in forums, attend conferences, and participate in networking events to cultivate your knowledge base and build meaningful connections within the community.
Pay Attention to Recommendations and References
When selecting offshore partners or service providers, prioritize recommendations and references from trusted sources. Conduct thorough due diligence to assess potential collaborators' reputations, track records, and credibility. Request client testimonials, case studies, and references to validate their capabilities and ensure compatibility with your organization's culture and values.
Conduct Initial Interviews
Initiate the screening process by conducting initial interviews with prospective candidates or service providers. Clearly communicate your expectations, project requirements, and evaluation criteria to gauge their suitability and alignment with your objectives. Assess their technical proficiency, communication skills, and cultural fit to ensure flawless integration into your team or project.
Get the Result
Once you've selected the right offshore partner or augmented staff, establish clear communication channels, performance metrics, and project milestones to monitor progress and ensure accountability. Foster a collaborative environment built on trust, transparency, and open communication to facilitate seamless collaboration and drive results. Continuously adapt and evaluate your approach based on feedback and insights to optimize performance and maximize the return on your investment.
How to Find a Trusted Offshore Staff Augmentation Partner?
We at MaybeWorks highlight two main rules you must adhere to find a trusted offshore staff augmentation partner.
Take into consideration the reputation in the market
No business can afford to compromise on its quality. It is even more important to immediately weed out those who blow off deadlines or are rude in their work. Therefore, be sure to check the partner's reputation before entering into a contract.
There is no single base for offshore staff augmentation companies. But, as you know, recommendations are the best way to choose a restaurant or hotel. The same applies to selecting an offshore staff augmentation partner. Having formulated your terms of reference and decided on a budget, ask your friends, partners, and Facebook acquaintances if they can recommend someone. As a result, you will have a list of several proven companies.
You can research their history and reputation on the Internet. Reviews of partnerships are posted on platforms like Clutch and GoodFirms.
You can get an objective view of the company by using LinkedIn. Check the following points:
- Do they have many subscribers, and who is subscribed to them?
- Who is connected to them? Perhaps you have mutual acquaintances?
- Do they publish their posts, and what are they about?
This information will tell you if the company cares about their image and how knowledgeable they are.
If there are still doubts, you can always contact the partner's previous clients and ask about their cooperation experience. Sign the contract only if you are sure the selected partner has a good reputation and relevant experience.
Experience is the most important selection criterion
When approaching potential offshore staff augmentation partners, narrow down the list of contenders by evaluating them on the following criteria:
- Skills
- Technical knowledge
- Experience in solving complex problems
- Mastery of the latest technologies
- The presence of similar cases in the portfolio
Remember that technical experience is crucial to the success of a staff augmentation deal. You should not choose a company whose stack is limited to a couple of technologies, even if they are the best in these few technologies. Practice shows that the more experience a company has in different software technologies, the better the quality of your project will be.
For example, MaybeWorks has more than 12 years of experience. During this time, we have helped develop projects of all levels of complexity, from helping large Ukrainian corporations to providing our programming teams to startups from the USA and Europe. Therefore, no new projects can surprise us. It is much easier to communicate with such an offshore staff augmentation company.
How MaybeWorks Can Help?
Established in 2012, we at MaybeWorks are a leading IT staff augmentation solutions provider. Our development team comprises over 50 seasoned developers who are well-versed in the latest technologies. We can augment your team with developers specialized in the JavaScript/TypeScript stack, encompassing:
- React/Angular
- Node.js (Nest.js/Express)
- AWS/Google Cloud Services
- Database management: MongoDB, MySQL, and PostgreSQL
MaybeWorks developers bring extensive expertise across a wide array of industries. From FinTech innovations to tailored solutions for banking, insurance, trading, and blockchain applications, we excel in executing software development projects of varying complexities. Our proficiency extends to diverse systems, including ERPs, CRMs, HRMs, B2B portals, SaaS, and IaaS platforms.
Feel free to contact MaybeWorks to augment your team with our IT staff augmentation service!
Conclusion
Staff augmentation in offshore outsourcing in 2024 is not just a trend but a necessity for many companies looking to remain competitive in a rapidly changing digital world. Adopting a staff augmentation pricing model allows businesses to be flexible in resource management, optimize costs, and speed up development. Hopefully, our professional tips will help you find the perfect IT staff provider to become not just temporary support but a valuable addition to your team.
Remember, the key to successfully integrating new team members is clearly understanding your goals and needs and creating an environment that fosters effective collaboration. Your future is in your hands, and choosing the right IT staff provider can be the key to your success in the new era of technology. Good luck expanding your development team!
FAQ
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How much do offshore staff augmentation services cost?
The cost of offshore staff augmentation services can differ depending on several factors, such as the location of the offshore team, the skills and expertise required, the duration of the project, and the specific services offered by the provider. Offshore staff augmentation services may typically be priced hourly, monthly, or project. Hourly rates can range anywhere from $10 to $50 or more per hour, depending on the skill level and location of the offshore team members. Monthly rates may vary widely depending on the scope of work and the number of resources required.
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Will offshore staff augmentation help reduce team costs?
Offshore staff augmentation can reduce team costs by accessing lower labor costs and specialized skills from a global talent pool. Still, carefully considering communication, management, and quality assurance is critical to maximize its effectiveness and mitigate potential challenges.
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How to ensure data security and privacy when increasing offshore staff augmentation?
You must implement robust data-transmission encryption protocols, enforce strict access controls and authentication measures, and conduct regular security audits and assessments of offshore vendors' systems and practices. Clear contractual agreements outlining data protection requirements and responsibilities must also be established.
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How to establish fruitful cooperation between the offshore team and the team from the company's office?
Special attention should be paid to the cultural fit of new team members. Cultural fit is not just a fancy term but an important factor influencing the team's performance. Supporting corporate culture and the involvement of each employee in the company's life is the key to successful integration and achieving common goals.
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What is the process for onboarding and integrating offshore team members into existing workflows and processes within your company?
To onboard and integrate offshore team members, begin with thorough orientation and training sessions to familiarize them with company culture and workflows. Then, assign mentors.
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How to solve the problem of different time zones when working with an offshore team?
Establish overlapping work hours for real-time collaboration while encouraging asynchronous communication through documentation and flexible scheduling. Clear communication protocols and cultural sensitivity should be implemented to foster understanding and mitigate challenges stemming from diverse time zones.
