How to Achieve 70% Revenue Growth with Staff Augmentation

August 29, 2023
Table of content

Staff augmentation is an outsourcing technique used to achieve organizational targets efficiently. This approach involves assessing current employees and determining the need for additional expertise. The economic benefits, improved organizational productivity, enhanced customer service, access to emerging technology, and increased versatility make staff augmentation a popular choice for outsourcing businesses.

Can Staff Augmentation Save Your Revenue?

Absolutely. Utilizing staff augmentation services can lead to significant cost savings for your company, often reaching up to 70% or more in certain cases. Read on to discover how this strategy can work wonders for your business.

According to a report by Global Workplace Analytics, a remote workforce can save companies an average of $11,000 per employee per year. By leveraging staff augmentation and tapping into remote professionals, companies can achieve substantial savings without compromising productivity.

Reasons Behind Companies' Adoption of Staff Augmentation

Companies aiming to expand their workforce and execute IT strategies often find value in entering contracts with IT consultancy firms that provide highly skilled workers. This approach offers cost savings compared to hiring additional in-house staff.

Companies have the flexibility to directly select employees and utilize various approaches for their staff augmentation model. The vendor handles logistical and operational matters while the company focuses on core projects with its augmented teams.

Did You Know?

  • Approximately 300,000 jobs are outsourced annually in the US.
  • In 2020-2021, about 55% of small firms had intentions to outsource business processes.
  • The US Staffing Industry is projected to exceed $150 billion by 2024, according to Research and Market Study.

Maximizing Cost Savings Through Staff Augmentation

Staff augmentation proves to be a cost-effective solution for businesses, yielding several benefits:

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Recruitment and Training Cost Savings

Recruitment is a costly procedure. When recruiting a resource, internal recruiters must identify potential candidates, assess them, and navigate through complex interview procedures. Venturing into new markets often necessitates additional labor or costly partnerships with organizations that offer enterprise-level hiring solutions.

Employee raises can lead to significant cost savings. With increased staffing, companies gain access to the global IT services they require while curbing unnecessary expenses. Workloads and costs tend to rise during the hiring, training, and onboarding processes. Increasing your workforce in various sectors can enhance team capabilities while maintaining cost efficiency. By streamlining the team's workload and minimizing expenses, additional work is alleviated.

A study by Deloitte found that the cost per hire for a full-time employee can range from $4,000 to $7,000. In contrast, staff augmentation allows businesses to skip these expenses and access skilled individuals at a fraction of the cost.

Easy Scalability

Scaling your workforce cost-effectively is achievable through staff augmentation. By curtailing expenses and attracting top-tier talent for projects, businesses can achieve faster growth compared to hiring additional full-time employees. Workloads across various sectors are in a state of constant evolution. 

Opting for temporary hiring presents an ideal solution for maintaining project-by-project control while adhering to both current and future requirements. This approach allows for increased output without compromising project efficiency.

Additional Costs 

Companies require robust strategies to navigate emergencies effectively. For instance, the COVID-19 pandemic compelled workers to transition to remote work. Having an augmented team can significantly mitigate expenses during such situations. Notably, in situations like these, the flexibility of an augmented team can yield cost savings.

Recruiting the wrong employee can lead to substantial financial losses, a challenge that is becoming increasingly prevalent. However, employing a remote approach can help you secure the best candidates. Once you onboard individuals who possess the necessary skills, backed by positive reviews and performance records, the likelihood of assembling the right team increases significantly.

By adopting a remote work setup, you can also achieve substantial savings. Operating remotely eliminates the need for extensive office space, potentially saving thousands on rent. Additionally, expenses related to utilities, furniture, equipment maintenance, security, and other overheads can be significantly reduced.

Retain Control

While staff augmentation involves a form of outsourcing, it empowers businesses to retain control over their teams. A significant advantage is the ability for companies to closely monitor the progress of their temporary workers. This approach often mitigates challenges associated with fully outsourcing tasks to external entities. It aids businesses in safeguarding the confidentiality of their projects while facilitating project evaluation.

Introducing a new team can bring forth insightful suggestions for refining projects or procedures. This external perspective targets enhancements and bolsters workplace productivity and innovation. 

Furthermore, each workplace possesses a distinctive environment. Project-based, temporary team members are less likely to become entangled in office politics, making them conducive to focused collaboration.

Engaged and Dedicated Employees 

Remote workers tend to be highly engaged in their tasks, displaying a strong sense of attentiveness. They generally take fewer leaves unless faced with emergencies. 

Moreover, they are likely to dedicate more time to work, as they eliminate the need for travel and enjoy the comfort of their chosen work environment. This commitment results in a notably low turnover rate, serving as a potent retention tool for businesses. 

The increased efficiency in task completion enables the pursuit of additional projects with the same team. Ultimately, this presents a cost-effective and sustainable approach in the long run.

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Factors to Consider When Calculating Savings

Hourly Rates and Contracts

When evaluating the potential cost savings of staff augmentation, hourly rates and contract durations play a crucial role. While augmented staff might have slightly higher hourly rates, these costs are offset by the absence of long-term commitments and the flexibility to hire for specific project phases.

A study by Staffing Industry Analysts found that, on average, the blended hourly rate for staff augmentation is approximately 15% higher than for full-time employees. However, when you factor in the savings associated with recruitment, training, and benefits, the overall cost-effectiveness becomes evident.

Hidden Costs

While the cost savings of staff augmentation are impressive, it's essential to consider potential hidden costs. These may include communication tools, project management software, and initial setup expenses for remote workers. However, these costs are typically lower than the continuous expenses of maintaining an in-house team, making the overall cost advantage still substantial.

Best Practices for Maximizing Savings

Clear Project Scope and Goals

To ensure optimal cost savings through staff augmentation, start by defining a clear project scope and goals. This clarity helps in avoiding scope creep, which can lead to unnecessary costs. Effective communication with augmented staff is essential to align expectations and prevent budget overruns.

Effective Project Management

Project management plays a vital role in optimizing staff augmentation for cost savings. Project managers are responsible for efficient resource allocation, task delegation, and timeline management. A well-organized project ensures that augmented staff members are working on tasks that directly contribute to cost-effective outcomes.

Regular Performance Assessment

Regularly assessing the performance of augmented staff members is critical to ensuring that you're getting value for your money. If a particular resource isn't meeting expectations, staff augmentation allows you to switch to a better-suited professional without the costs associated with terminating an employment contract.

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Businesses are increasingly turning to staff augmentation to save a substantial portion of their annual expenses. Alongside the points discussed in this article, several other factors contribute to the exponential growth potential and up to 70% revenue savings that staff augmentation can offer.

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