As businesses grow, they seek to expand their teams by hiring additional members to carry out various business functions effectively. This need for workforce augmentation arises due to the company's increasing demands and daily operations.
Finding top talent with the necessary skills, experience, and cultural fit can be a complex process.
Many intricacies are involved that add to the costs, not to mention that the process is time-consuming. In fact, in the U.S., companies pay between $4,000 to $20,000 to hire a new employee outside of their nominal salary and benefits.
Because of this, companies are looking into more cost-effective and time-saving strategies to help them acquire team members to help with their projects. Among the available approaches are staff augmentation and project-based consulting.
If you are considering these hiring solutions, you’ve come to the right place. This article covers the key differences between these approaches to help you decide which is best for your business.
What Is IT Staff Augmentation?
Staff augmentation is a flexible and temporary staffing solution where an organization engages a skilled workforce on a temporary basis. This approach is especially prevalent in the IT industry.
For example, the company hires external IT professionals on a contract basis, who will then work alongside their internal IT team for specific tasks such as product development or system integration.
This provides an easy way for companies to hire IT talent quickly without worrying about long-term commitments usually involved in hiring full-time employees. It’s also a cost-effective strategy, offering potential cost savings compared to hiring an in-house team.
IT staff augmentation is a similar approach to Near’s processes. Our contractors are hired formally through a company that works as an employer of record. They are then subcontracted to the final company but work as direct employees.
What Is Project-Based Consulting?
On the other hand, a project-based consulting service involves hiring a consultant as a project manager for a specific project. The talent comes from a consulting agency and is usually a completely independent contractor that requires minimal training, eliminating the need to hire additional permanent employees or full-time staff.
That means the contractor is not employed by the client company and is hired only to provide services to solve a specific situation, whether software engineering, accounting, marketing, finance, etc. Consultants are usually paid a fixed fee that involves an hourly rate.
In this approach, the consultants provide specialized expertise that the company has difficulty hiring in their organizations. They may also use it to fill specific skill gaps, lowering the financial risks of hiring additional employees and temporary staff.
What Are the Differences Between Staff Augmentation and Consulting?
While staff augmentation and consulting are both approaches that allow companies to hire talent to suit the needs of their organization, they differ in various areas.
The main difference is the employment duration. Staff augmentation hires extra staff for short-term projects to support full-time staff members. In contrast, consulting firms provide a staffing model as needed with a dedicated team with fresh perspectives.
Cost-effectiveness
One of the core benefits of staff augmentation is that it’s less expensive and a more flexible choice for businesses than consulting. These contractors charge less per hour than a specialized consultant, and remote staff are scheduled according to business demands.
They also don’t require any benefits that full-time employees are entitled to. But you can still offer some employment benefits, especially if you plan to take them in as full-time employees in the long run.
Staff augmentation allows companies to test individual talents and take them in as full-time employees. This differs from consulting, usually done only to get expert advice on a project without hiring them full-time.
However, consulting can also be cost-effective if the client company is eyeing a long-term relationship and would require the advice and assistance of the consultant often to support internal resources.
Control
Staff augmentation typically involves hiring a few additional staff to help with a project that needs extra time. Despite that, complete control for businesses over the project's scope, timeline, and milestones is often a win over traditional hiring on a permanent basis. You simply delegate tasks to your hired talent to complete a range of services in line with business goals, who work in the same capacity as internal employees, just on a contractual basis.
On the other hand, involvement in the consulting market means solely engaging one expert who is familiar with industry standards and will work with internal teams. They may also have other clients to whom they provide their consulting services.
Because project-based consultants provide expert knowledge and opinions, streamlined communication skills with the service providers will help ensure that everything plays out according to industry best practices.
Flexibility
Staff augmentation allows a company to access a wide range of specialists that provides an external perspective to their current workforce. While remote hiring is available, companies usually only work with local employees for better access to them on an as-needed basis, for example, post-launch support for an event.
Also, staff augmentation provides more flexibility and a broader range of skills, like consistent customer support. Since a company retains complete control over the project, it can adjust the scope and duration of the engagement as needed. The same cannot be said for project-based consulting, which taps into specialized knowledge. This model is typically less flexible because the arrangement involves delivering a specific project up to market standards with a defined scope, targets, timeline, and budget.
Security
While consulting does not require you to provide access to systems and data, staff augmentation will necessarily involve providing workers with access to everything they need to coordinate and work with the internal IT team.
Without robust security controls, hiring without minimal training may pose security risks. However, regardless if you acquire outsider talent through staff augmentation or consulting, it’s still recommended that you implement security controls when interacting with both types of workers.
When Should a Company Use Staff Augmentation?
Staff augmentation may be better for companies that require talent to help them carry out the requirements of specific projects. Specifically, this approach is ideal for organizations that need:
Flexible scaling
Staff augmentation allows companies to scale their pre-vetted resources based on changing needs without worrying about drawing out a new contract or direct hiring efforts. Because the hiring approach is flexible, the company retains control over the project and can adjust the engagement as needed.
Ongoing support
Staff augmentation is popular for companies requiring ongoing operational work support with no end date. Because the employees are paid by the hour, they can utilize them to carry out specific needs at any given time.
Long-term engagement
Because the freelancers or temporary staff engaged through staff augmentation will be working closely with the current team of in-house employees, companies may opt to onboard them as full-time employees down the line.
There lies the importance of creating long-term relationships with them and educating them on business processes, which will make the talent available in case the company requires their services again.
When Should a Company Use Project-Based Consulting?
Project-based consulting, on the other hand, is a better option for companies who are looking for specialized talent or skills that they cannot find in their organization. Specifically, they are used for:
Project-based work
Hiring a consultant requires the company to set strict guidelines about the scoped-out project. They need a defined plan, timeline, and budget to build new software projects or implement a business solution.
Internal resource constraints
Hiring a consultant can be beneficial for companies that don’t have the necessary resources to dedicate to a specific project. Whether it be time, staff, or budget constraints, they can instead opt to work with a consultant who can provide strategic advice and fresh perspectives on an as-needed basis.
Lack of in-house expertise
Consulting is usually seen as a means to find external resources generally unavailable in-house. Companies hire consultants to get a perfect solution to achieve successful project goals.
This approach is best for organizations looking to solve talent gaps to target particular business demands they do not usually encounter. It requires in-depth knowledge outside of the permanent team to pass the roadblock.
Conclusion
Staff augmentation and consulting are excellent approaches to acquiring skilled professionals outside of conventional hiring for a company’s needs. While they are similar in many ways, they also have stark differences that an organization needs to consider.
As a quick refresher, staff augmentation is the process of hiring a third-party provider to carry out tasks that existing employees take on. The company retains complete control over the project, hiring process, and pay. Freelancers or contractors hired through this approach are usually paid on a short-term basis, which can lead to cost efficiency compared to hiring full-time employees.
On the other hand, consulting involves hiring high-quality talent to provide a broad range of expertise and innovative approaches to a specific project or task. Because of their skills and specialization, they can handle complex work and ensure proper quality assurance to fill any organizational human resource constraints. While their services may be more expensive, the right fit can increase project success chances.
The best option for your business ultimately depends on your goals and budget. Make sure you set your priorities before deciding which approach to take. With your organization’s needs and preferences in mind, you can decide whether staff augmentation or consulting is the right strategy for you.
If you’ve decided on staff augmentation to access top talent fast, start interviewing candidates from Latin America with Near.
