Staff Augmentation
Offshore Outsourcing Models: Introduction | Outsourcing Road Map | Relationship Management | Staff Augmentation | Project-Based Deployment | Dedicated Offshore Staffing | Build Operate Transfer (BOT) | Managed Subsidiary | Captive Offshore Subsidiary | Joint Venture
BACKGROUND
Historically, staff augmentation was an organisation's outsourcing spring-board.
With staff augmentation, outsourcing providers supply individuals and teams that meet the customers' resourcing needs. These resources are deployed within the customers' organisation, and are generally directly managed by the customers' own staff. Standard practice is for each team to have a lead or senior member, tasked by the supplier with taking responsibility for ensuring the team meets the customers' requirements. Staff augmentation became very popular where indigenous resources were scarce and, as a consequence, also very expensive.
At one time suppliers were bringing resources into Europe, and paid them offshore wages, supplemented by allowances. Accommodation was often provided, and bonds applied to ensure the resources remained loyal. With the resources' low overheads, offshore suppliers were able to undercut indigenous suppliers and contractors while achieving a significant return on their investment. The very low labour costs also enabled suppliers to retain staff 'on the bench' ready for deployment as required.
Changes in the rules concerning the provision of work permits, and the payment of employees seconded has meant that the personnel costs and therefore charge-out rates for offshore suppliers are now generally on a par with those of indigenous providers. Falling local demand has also ensured that indigenous providers and resources are now cheaper. The increasing demand for resources offshore has also reduced the ready availability of resources. The increasing cost and numerous opportunities avail-able to staff means that offshore suppliers are no longer able to maintain 'benches'.
Advantages
- Tight control with resources working on-site
- Good stepping off point to off-shore delivery
- High flexibility, rapid ramp-up and down
- Provides rarely used specialist skills
- Resource issues (generally) belong to the supplier.
Disadvantages
- Utilisation of local resources (equipment, space and management time)
- High cost.
Criteria For Using Staff Augmentation
Currently there are few advantages in using an offshore supplier for resource augmentation over indigenous onshore suppliers.
Consider staff augmentation when:
- The required expertise is not available in-house, and cannot be recruited in the short term
- The required expertise is not available in house and the demand for the resource doesn't warrant full-time staff recruitment
- Existing staff are being trained, and cover and /or mentors are temporarily required
- The requirement is relatively short lived
- An on-site presence is essential.
Consider staff augmentation specifically from an offshore provider when:
- The above points apply, and where the requirement forms part of an overall strategy to transition work offshore.
In the above case, an on-site team from an offshore supplier may ultimately act as a conduit to the offshore teams and provide a local, on-site point of contact for them and the customer. Such on-site teams can be used to great effect to:
- Provide and interpret requirements
- Give technical leadership and liaison
- Provide support.
Critically, the on-site team can provide an extra layer of quality assurance, performing pre-checks on material delivered from the offshore team before it is handed over to the customer.
Points To Consider
- How will you manage the resources?
- Will you retain sufficient knowledge in-house to protect your company's core business?
- If the requirement increases will your budget allow you to re-tain the resources?
- Can you transition resources to full-time employees if you require it?
- Check what other up and coming commitments the resources may have - will this affect their ability to deliver if schedules slip?
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