Dedicated Teams vs Staff Augmentation

As your organization grows, you’ll eventually hit a point where you’ll have to choose between extending the capabilities of your internal staff or setting up a dedicated development contract with an outside provider.

The choice between using dedicated teams or staff augmentation is often a challenging decision as each option comes with its own set of pros and cons.

In this article, we’ll explore the positive and negative sides of each option and when it makes sense to choose one over the other.

What is Staff Augmentation?

Staff augmentation is an outsourcing strategy that uses outside personnel to respond to a specific business need, typically used as a tool to manage temporary spikes in demand or to complete a specific project.

What are the Benefits of Staff Augmentation?

Staff augmentation is an effective tool for responding to changing customer needs and business challenges and increasing agility.

Here’s a quick look at some of the benefits it provides.

  • Flexibility. One of the main benefits of staff augmentation is that it allows organizations to increase or decrease their workforce on demand, much in the same way that a retail store might hire seasonal workers to deal with the holiday rush.
  • Cost-effective. Team augmentation requires no investment in infrastructure and eliminates the costs of hiring and training in-house employees. In this model, clients only pay for what they need and can access in-demand, specialized skills on an as-needed basis.
  • Vendor deals with admin tasks. Staff augmentation also eliminates the need for finding, interviewing, and training employees with the right skills and experience. It’s on the vendor to deal with the organizational and administrative responsibilities, allowing the client to focus on their core business activities instead of paperwork and onboarding.

What are the Disadvantages of Staff Augmentation?

  • Can be expensive. One of the biggest mistakes companies make when outsourcing is using staff augmentation as a way to avoid hiring full-time employees or the expense of hiring a dedicated outsourcing team on an ongoing basis. Used inappropriately, staff augmentation may cost you more in the long-term than a more permanent in-house solution.
  • Not ideal for ongoing projects. Staff augmentation isn’t great for long-term projects or sourcing talent that you’ll need on an ongoing basis. Workers may need to take on other projects or leave the vendor company for a more permanent role before the project ends. Additionally, staff augmentation is typically billed on a time-and-materials pricing model, which means you might end up taking on unnecessary costs long-term.
  • Isn’t great for projects that rely on institutional knowledge. In cases where a project requires a deeper contextual understanding of the client’s business, using staff augmentation often means long ramp-up times.
  • Risk of developing dependencies. In some cases, using staff augmentation may increase dependency on a single third-party provider. For instance, if you’re using staff augmentation to access the same specialized skill for multiple projects, there’s no guarantee that the vendor can provide talent on-demand. If you end up needing a specific skill on an ongoing basis, you’re better off hiring an in-house employee or setting up a long-term contract with your outsourcing provider.
  • Inconsistent quality. The nature of staff augmentation lends itself to high-turnover, as employees often work on a short-term contract or freelance basis. In turn, it means that the same people may not be available to take on projects as needed. As a result, clients end up working with different vendors and employees, which can create inconsistencies in quality.

Staff Augmentation Advantages and Disadvantages

When to Use Staff Augmentation:

While staff augmentation certainly has its pros and cons, the bottom line here is, this model is best suited for short-term goals. Here are a few examples of when this strategy makes the most sense:

  • Increase capacity to meet temporary demand. Staff augmentation is ideal for responding to temporary spikes in demand, meeting a tight deadline, or taking on extra projects that your internal team doesn’t have time to handle themselves. In this scenario, you’re typically hiring a team for a few months or weeks at a time.
  • Access skills on a per-project basis. You might use staff augmentation to access specialized skills not available in-house for a one-off project. Team augmentation allows clients to “plug” skilled developers into a project who can quickly understand their role and immediately start adding value.
  • Use flexible labor to gain a competitive edge. In some cases, organizations use staff augmentation as a tool for getting a new product to market faster, launching a startup, or responding to new customer needs as they emerge. Staff augmentation gives companies the ability to say, build an AR app, an intelligent chatbot, etc., and deliver innovative solutions to their end-users without hiring a bunch of AI experts and data scientists to build these new solutions.
  • Expand operations on a trial basis. Team augmentation may also be used to “test” different vendors before committing to a long-term partnership.

What is a Dedicated Software Development Team?

A dedicated development team is an outsourcing model that allows clients to work with a team of developers on an ongoing basis. In this model, the vendor provides the client with all staff required to complete your project(s). These workers will generally work for your company full-time or for a specific number of hours each week/month.

Unlike staff augmentation, working with a dedicated team is generally used to help organizations meet long-term goals.

Teams might work closely with internal staff–much like remote employees–or they might work autonomously on projects your in-house team doesn’t have the time or skills to handle themselves.

What are the Benefits of Hiring a Dedicated Development Team?

Clients often choose this outsourcing model when they need to increase their capacity to take on new projects or keep up with rising demand, yet lack the resources to find, hire, and train a team of skilled workers.

Here’s a quick look at some of the benefits of taking this approach:

  • Allows internal and external teams to work together. If you’re working with a nearshore company, dedicated development teams can easily collaborate with your in-house staff and work as a united, distributed team.
  • More control. Because this model supports a high-level of client involvement, it allows organizations to maintain a higher level of control over workflows, processes, and quality standards.
  • Predictable costs. Compared to staff augmentation, working with dedicated development teams provides organizations with predictable costs. Customers pay the same flat rate each month, allowing more control over their budget.
  • Scale up or down as needed. Clients can easily add or remove team members to scale up or down as required. Many contracts allow clients to temporarily add extra developers to their existing plan to meet short-term spikes in demand or access a skill for a specific project without the costs or potential labor law violations of attempting to do this in-house.

What are Some of the Drawbacks?

Working with a dedicated team of software developers offers several compelling benefits. However, this model requires a lot of planning, collaboration, and a clear picture of how your outsourced team will help you achieve specific goals.

Because this strategy requires clients to invest time and resources to incorporate external developers into existing teams, it’s not always the best solution for organizations short on time or strapped for cash.

Here’s a look at some of the drawbacks associated with this option:

  • Not very efficient for short-term projects or goals. In most cases, you’d typically contract work out to a dedicated team to add capacity on a long-term or permanent basis. As such, external teams generally maintain a steady work pace and aren’t really equipped to respond to short-term needs. Essentially, using dedicated teams this way looks a lot like what happens when your internal team is spread too thin.
  • It can be more expensive than other pricing models. For short-term projects, keeping a team on retainer may be more expensive than opting for time & materials or fixed-price contracts, as you’ll need to outsource a certain volume of work to achieve the most bang for your buck.
  • Managing dedicated teams is a big commitment. While the vendor takes on the responsibility of recruiting talent, calculating rates, and matching clients with the right people, companies using this model should be prepared to invest significant time into managing external teams.

It’s worth noting that in an internal survey of Tiempo employees, multiple respondents stressed the importance of integrating external staff into the company culture. For clients, that means keeping communication channels open, setting clear expectations, and engaging in team building exercises.

Dedicated Software Teams Advantages and Disadvantages

When to Use This Approach:

Partnering with a dedicated development team is best-suited for reaching long-term strategic goals.

Dedicated teams function more like a distributed internal team than a temporary provider, which means, clients should be prepared to invest the time and effort into nurturing a relationship with the vendor and building the external team into the big-picture business strategy.

  • Long-term or complex projects. If you’re looking for ongoing support, dedicated teams are a more reliable, cost-effective option than staff augmentation. Projects that require a contextual understanding of the business and its goals, as well as those involving continuous testing, updates, and improvements, benefit from this model.
  • Dedicated teams build on knowledge over time and get to know the organization. Conversely, using temporary staff means clients must constantly hire and retrain new developers to pick up where the last group left off.
  • In-house teams lack the knowledge or resources to meet business demands. In situations where internal developers don’t have the time or skills to take on new projects or the client lacks the resources to hire new employees, dedicated teams represent an attractive in-between option. If you’re working with a nearshore vendor, dedicated development teams offer the same experience as a distributed domestic team, at a much lower rate.
  • Projects in which the scope changes or requirements are unclear. If you’re working with a dedicated nearshore team, this model is effective for projects that require teams to adapt to changing requirements or in cases where specs have yet to be defined. With the right strategy and tools in place, internal and external teams can apply Agile best practices and get to market faster.

Final Thoughts

In the end, the choice between working with a dedicated team or using staff augmentation really boils down to defining what, exactly, you hope to accomplish by outsourcing your project.

Big-picture, you’ll benefit from using both outsourcing models to achieve different business objectives.

Staff augmentation is best for short-term goals, one-off projects, and the ability to innovate at a rapid pace. Dedicated teams, on the other hand, are ideal for long-term cost-savings, ongoing projects, and a close collaborator with skills and experience you won’t find in-house.

Tiempo’s nearshore business model allows clients to collaborate with top developers in the same time zone.

Contact us today to learn more.