Highlight for busy users:
Many people react to the words „body leasing” or „staff augmentation” with confusion. Okay, all this outsourcing and other flexible staffing models are a nice buzzwords, but isn’t it better to just hire a specialist internally and not mess around too much?
Sure. In certain cases, in-house hiring can actually be the right way to go. However, often it is way more efficient to work with professional partner, who can supply you with high quality specialists, only for specific period of time. When is it right to hire in-house, and when is it right to use staff augmentation? Keep on reading to find out.
In theory, in-house recruiting is nothing unusual. In theory, it’s a simple process aimed at finding the best possible employee. The HR department, in cooperation with the department where the vacancy occurs, draws up a detailed description containing the requirements, duties and benefits envisaged for the position. Sometimes the HR department is supported by an external recruitment agency which, in return for a hefty remuneration, helps to recruit candidates for interviews. Employees hired this way enter a long-term relationship with the company either based on B2B or an employment contract.
In practice, however, it is not so simple.. and cheap. The economic situation on the given market is always a factor that needs to be taken into account. And as you probably already know, the demand for IT talents is enormous, which makes traditional forms of recruitment more difficult to proceed with. And it is not easy to find developers for hire.
The biggest obstacle to employment is time-to-hire. This indicator refers to the amount of time that passes between when a job candidate is initially contacted by a company and when they accept the employment offer.
In the United States, the job interview process takes an average of 22.9 days overall. By contrast, jobseekers in France, Germany, the United Kingdom and Australia report significantly longer job interview processes. French jobseekers report the longest interview durations at 31.9 days, followed by Germany at 28.8 days, the United Kingdom at 28.6 days, and Australia at 27.9 days. In the tech industry itself, these indicators look even worse.
When hiring employees internally, you have to reckon with high costs. Recruiting a new employee is usually an expense of 20-25% of their base salary. However, the final price always depends on how much cost is incurred internally and how much externally. For example:
Sounds bad? And these are just the costs associated with sourcing candidates for interviews. And then there are the assessments, interviews, onboarding. You have to pay your HR department and accept a drop in productivity during recruitment. To illustrate this, an example breakdown of the cost of hiring a developer looks like this:
All those aspects make in-house recruiting in IT quite a challenge. Both the cost and the risk are substantial. Hence, alternative forms of employment are worth considering.
One such alternative form of an IT employment is staff augmentation. In this considerably more flexible and project-focused model, developers are hired only for a specific period of time for a fixed price agreed on with a provider, such as DEVMATCH.
Read related article: IT staff augmentation vs. software outsourcing. What is the difference?
Although the provider is the formal employer, you retain full control over both the composition of your IT team and it’s pipeline. Moreover, your are also involved in a hiring process, which is however significantly shorter compared to in-house hiring. Staff augmentation agencies provide you with a list of professionals available immediately and willing to work in a flexible model. Then, interviews take place, during which you select the most suitable and interesting candidates. Once you’ve decided, you sign a simple contract and can already enjoy your high-quality specialist!
As a result, there are no salary, paid-leave or other benefit obligations on your side. You simply pay the provider a fixed amount of money for making best developers available to your organization for a specifc period of time (usually from 6 months upwards).
To wisely choose a model for yourself, you need to think deeply about what your actual business needs are. We have prepared for you a list of several questions that will help you identify your real needs:
In general, if IT competency is one of the most important elements of your business model, and you’re able to meet the demands of the IT labor market (while keeping benefits high) and aren’t afraid of the arduous hiring process, then it may make sense to hire someone in-house.
However, if you are afraid to spend millions on maintaining an extensive IT department, and your actual need is to quickly power an in-house team, then it is worth considering a flexible model of staff augmentation.
It’s obvious that these two simple tips are not an exhaustive list. „In-house recruitment or IT staff augmentation?” is never a straightforward question, because there are numerous factors to consider.
We have listed all the differences for you in the table below. You will find the differences not only between in-house recruitment and staff augmentation, but also a comparison with the software outsourcing model, which is another alternative to in-house hiring.
Before you decide on in-house recruitment or staff augmentation, you should answer some important questions. These will help you identify whether you need a large, in-house team of well-paid IT specialists, or whether you can afford a more flexible cooperation model that will save you time and money and decrease your financial risk profile. Last but not least, staff augmentation fits in current trend of renting rather than owning, which is perfectly in line with agile software development methodology.
If you would like to dive into details of staff augmentation process or hire developers for a project, contact us. We will be happy to help you find the right match!