IT staff augmentation pros and cons

What is IT staff augmentation? How does it differ from hiring freelance contractors? What do you need to watch out for from a legal or employment law point of view? Nick Martindale explains

Despite layoffs in the global tech sector, demand for IT staff remains high as organisations look to adopt digital technologies. But with concerns over the wider economy, many businesses are reluctant to add to their permanent headcount. This is where IT staff augmentation comes in – as a solution to the need for skilled individuals without the commitment that comes with a full-time, permanent post.

What is IT staff augmentation?

Cyril Samovskiy, founder of tech recruiter Mobilunity, describes IT staff augmentation as an “HR strategy that involves the external sourcing of specialised IT professionals to supplement a company’s internal workforce”.

“Unlike short-term freelance arrangements, staff augmentation is typically characterised by its long-term nature,” he explains. “It revolves around leveraging external talent to fill skill gaps, particularly in areas where in-house expertise may be lacking. It typically serves as a strategic extension to a company’s existing on-site and in-house staff, providing flexibility and scalability in managing IT projects and operations.”

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What are the benefits of IT staff augmentation?

There are several reasons why IT staff augmentation might be attractive.

One obvious one is the access it provides to talent and skills that do not exist within the organisation, says Andy Heyes, managing director, UK&I and Central Europe, at global technology recruiter Harvey Nash.

“The latest Nash Squared Digital Leadership Report shows that skills shortages continue to be a real headache for many organisations, even if shortages have fallen from their post-Covid peak,” he says.

Just as important, though, is the ability to switch off the use of such services as and when needed, providing flexibility at a time of uncertainty.

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“This scalability allows companies to reap the benefits of a permanent employee without the long-term financial commitment,” points out Joe James, director of contract services at IT recruiter Hamilton Barnes. “If a business finds a strong contractor, it’s more than likely that they will continue to re-engage their services.”

Another benefit is the experience that bringing in talented individuals can have on in-house IT teams.

“Professionals with different levels of seniority, strengths and personalities can be matched with internal employees to diversify the skills pool and achieve positive results,” suggests Eman Al-Hillawi, CEO of business change consultancy Entec Si. “This approach opens up opportunities for skills to be transferred and adopted by existing staff as they work in tandem with insourced specialists.”

Conversely, what are its drawbacks?

IT staff augmentation does have aspects that organisations will need to consider before they decide to adopt it. James suggests there can be an impact on workplace culture, which is often overlooked by organisations.

“Certain contractors, particularly those who frequently work for the same company or who are contracted on a longer-term basis, will ingratiate themselves into the fabric and culture of a team, while others simply want to get in, get their work done and get out,” says James. “This could affect internal staff, employee relations and damage company culture.”

Temporary team members could also feel left out and be less motivated than in-house employees, suggests Martin Hartley, group CCO of emagine Consulting, which can cause issues if they then decide to leave.

“If you put the time into bringing someone into your team and they don’t work out, businesses are forced to repeat the process and go back out to the market to find a person with the right skills to replace that role, which takes time,” he warns.

There can also be legal issues to think about.

“As this model involves bringing in external personnel to supplement in-house teams, the whole staff augmentation model needs to be properly set up from a legal perspective to be compliant with local regulations,” warns Samovskiy. “Failure to navigate these – such as adherence to local labour laws, tax regulations and other statutory requirements – may see organisations risk facing legal consequences, financial penalties, and operational disruptions.”

As a result, says James, such arrangements can require significant amounts of legwork to stay up to speed on legal requirements and any new developments.

“This work can include background and reference checks, visa documents as well as a bimonthly ‘vet’ to check that all security documents are up to scratch,” he adds.

How affordable is IT staff augmentation?

As with any contractor or freelancer relationship, the hourly rate will be higher than the equivalent cost for a full-time employee, says Hayes.

“Staff augmentation brings you flexibility and control so you pay for these advantages in the rates that contingent workers can command,” he says. “It is perhaps best used for discrete, short-term projects. It tends to be more expensive if it becomes a semi-permanent feature of the IT workforce.”

However, it can work out cheaper overall to bring in people on a temporary basis.

“With a potential recession looming, many companies do not have the budget necessary to increase permanent head count,” points out James. “Using contract staff or professional services is one way to circumnavigate this issue, while still meeting work demand.”

This is becoming an increasingly attractive option for medium-sized organisations, he adds, as well as larger businesses.

What other tips are there for IT staff augmentation best practices?

It’s important to have a clear plan and understanding of timeframes and an end-goal when entering into any IT staff augmentation relationship, warns Hartley. “There can be a tendency for organisations to be too vague around timeframes when it comes to onboarding a consultant,” he says. “It’s crucial to map this out exactly so you can stick to a plan of action.”

Think about personalities when looking to bring in someone external, advises Al-Hillawi. “Workplace change demands a level of consideration of the impact it will have on the organisation’s existing people,” he says. “Choosing the right external professionals with similar personalities and values when implementing IT staff augmentation is crucial to ensure day-to-day business continuity and the successful delivery of project work, which often results in people having to adapt to something new.”

Hayes suggests companies need to get used to the growing trend towards IT staff augmentation as a means of accessing talented individuals.

Says Hayes: “Being a ‘fractional worker’ with contract assignments to more than one employer appeals to the younger generations.

“They like the flexibility and variety it brings them, and the hourly rates they can command. As technology continues to be an area of investment and growth, so the extended workforce is likely to grow too.”

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Nick Martindale

Nick Martindale is an experienced freelance journalist, editor and copywriter. He specialises in writing about workplace matters, including HR, procurement and technology.