Comparing the cost Of Hiring In-House vs. IT staff augmentation

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Are you struggling to pick between in-house recruitment vs IT staff augmentation? Well, the cost may be a big factor. Let’s compare the cost of hiring in-house vs IT staff augmentation services, and see which one makes more sense for your company. Keep reading below.

Cash and calculator to Compare the cost Of Hiring In-House vs. IT staff augmentation

The cost of hiring in-house vs IT staff augmentation varies greatly. This is because different costs fall underneath each of these models that need to be taken into consideration. Moreover, you need to also look long-term and at the big picture when it comes to some of these expenses. So let’s explore the various costs that you need to calculate when comparing the price of hiring in-house vs IT staff augmentation.

Key considerations when hiring via IT staff augmentation vs in-house

Let’s look into some key considerations when hiring via 👉 IT staff augmentation vs in-house recruitment 👈. Both of these hiring models have different commitment lengths, time to hire, and the bench.

Commitment length

You need to consider how long you are looking to hire a software developer. Typically when we are hiring using in-house recruitment, we are looking for someone to join our company full-time and permanently. We are hoping for a long term cooperation.

Whereas, if IT staff augmentation services you can temporary developers for both short-term and long-term projects. These are contingent workers that join your team on a project basis. Their goal is to fill the skill gaps that exist in your development team. Once their role is done, the partnership is complete as well.

Time to hire

The time to hire using in-house recruitment will take about 3 to 6 weeks to hire one software developer. Now depending on your situation, you may not be in the position to wait this long. Sometimes you need to hire a new employee urgently and have little time to wait.

However, when we look at hiring software developers using IT staff augmentation you can hire 2 or 3 developers in as little as 7 days. This can make a huge difference, if you are looking to scale your team quickly. Also, using IT staff augmentation can save you when you are in a bind and need a developer ASAP.

Modern businessman in park on the bench waiting for another project

The bench

The downside of hiring someone in-house is the cost you have to cover when the developer is on the bench. So if the software developer is not attached to a project, you still have to pay them a salary regardless of the fact that they are not making you any money. Sometimes the times between projects can be long and you still have to pay to keep that developer on your team.

When using team augmentation you don’t have to worry about paying to keep someone on the bench. The vendor covers that cost. If you are not using the software developer, you don’t have to pay to keep them. The vendor will keep them on the bench or assign them a new project.

What are the risks of hiring in-house recruitment

Let’s explore the risks associated with hiring software developers using an in-house recruitment process. There are two major trends occurring in the IT industry worldwide due to the economic downturn and overall global instability. The first one is many tech companies are laying off workers. The second is that investors who usually pour money into tech startups are tightening their belts. Let’s explore both of the 👉 tech hiring trends 👈 in more detail below.

Massive layoffs in the tech industry

Since late last year and the start of 2023, giant tech companies are laying off workers at huge rates. Small companies are following suit, and some are even closing their doors for business. We have entered into a time of uncertainty for software developers. Many have lost their job due to the recession.

The rising costs of hiring an employee on top of inflation, force business owners to make tough decisions. We are seeing employers keep only the cream of the crop on their team while letting go of the access. Companies are doing whatever it takes to stay afloat, even if that means letting people go.

Hand counting savings when trying to hire developers

Investors are tightening their belts

If you are a tech startup that depends heavily on investors to fund your project, you may struggle to gain as much money as you need. We are seeing investors pinch pennies, which means startups have to think twice before hiring developers. They need to carefully plan out their hiring choices in order to make the most out of their budget.

So startups need to really look at alternative ways to get the developers they need to develop their products. They may need to look beyond hiring full-time employees on a permanent basis to meet their staffing needs.

What are the risks with IT staff augmentation services?

The IT staff augmentation model is not without its risk. There are some snags that you can run into when hiring programmers to join your team using this hiring solution. Firstly, the augmented staff you hire may not be the right fit. Second, you need to carefully consider and calculate whether this option is actually cost-effective for you. In some scenarios, it just simply isn’t. We’ll explain both of these in more detail below.

Unrecognizable man standing in office and using smartphone, with personal belongings in box

The new hire isn’t the right fit

Here at Swyply, we provide our customers with pre-vetted developers. Moreover, we enable our customers the opportunity to run potential candidates through an interview process. This way they verify for themselves, if the developer is the right match for them or not. But even with these things in place, there can be a mismatch.

The mismatch can result from numerous things. The mismatch can be due to the fact that your project has changed. Also, it can be a company culture mismatch, issues with communication, integration, etc. Honestly, the reasons can be endless, But here at Swyply, we have a solution for this hiring mismatch.

Swyply offers its customers a 👉 14-day guarantee 👈. This is a risk-free trial period that allows customers to test out developers for 14 days. If something is not right, they can switch the developer to another one and see if the new one is a better option. You can also choose to end our cooperation after these 14 days and not pay a cent if you are unhappy.

May not always be cost-effective

If you are using IT staff augmentation for a short-term project, the onboarding process may be longer than the actual work itself. For example, if you are hiring an augmented developer for 3 months, but your onboarding process takes 6 weeks then this may not be the right choice for you. This option may not make be worth it economically speaking. The developer will spend more time onboarding than actually working on your project. It’s important to run thorough calculations to see if 👉 short-term staff augmentation 👈 makes sense for your budget.

What costs do you need to cover when hiring in-house

Let’s explore what costs you are going to cover if you choose to hire in-house as opposed to using IT staff augmentation.

Recruitment costs

First of all, if you are hiring internally, then the recruitment costs are on you. You need to pay for the job openings you post online. You need to pay your human resources department for sourcing, recruiting, hiring, and onboarding new hires.

Moreover, if you are using a headhunter to recruit for a specific role, then you need to cover that cost as well. The cost of recruitment can be very high. You also need to take into consideration the risk of hiring the wrong person and having to do this process several times. Also, you need to consider the time that takes to recruit someone traditionally and if that time is not hurting your bottom line.

Employee benefits

Another cost that you will need to cover once you hire someone is employee benefits. You will need to cover things like health insurance, taxes, vacation time, and sick leave. Also, if you want to offer your 👉 employees perks 👈, then you need to cover that expense as well. So perhaps you want to offer your developers laptops, e-learning courses, gym memberships, etc. Summing up all these various employee benefits and additional employee costs can take a huge toll on your budget.

In house staff happy with their employee training opportunities

Employee training & raising competencies

When in-house recruiting you also need to cover ongoing 👉 training, professional development 👈 workshops, etc. Moreover, if you want to raise developers competencies with specific skills then you need to consider the cost of various courses. It is also a well-known fact that if you don’t offer your software developers the opportunity to grow professionally, they will bounce. They will look for work elsewhere, as they strongly dislike stagnation.

Benefits of working with an IT staff augmentation company

Let’s quickly explore some of the benefits of working with IT staff augmentation services. Some of the 👉 benefits of team augmentation 👈 include access to industry expertise, transparent costs, quick hiring, and maintaining good company culture.

Niche experts & industry expertise

When using IT staff augmentation you can gain some top-notch specialists. Moreover, you can gain developers that specialize in niche technologies. You are able to gain developers that are on demand, quickly and easily without being limited to your local market. You can gain experts that specialize in technologies such as Artificial Intelligence, Machine Learning, etc that are in demand in the software development market.

Handshake close-up of executives, signing a contract to hire new team members via IT staff augmentation

Hire someone to join your in-house development team at the speed of light

Hiring through IT staff augmentation to expand your software development team is much faster than other methods. Here at Swyply, we can provide you with software developers in as little as 7 days. You can hire 2 or 3 developers in one week, whereas with in-house hiring you may be able to hire one developer in 3 to 6 weeks.

IT staff augmentation is a great option if you are looking to 👉 grow your team quickly 👈. Moreover, if you need a coder, as of yesterday because your project suddenly changed. So you cannot afford to wait weeks for someone to come and join your in-house team.

Cost-effective & transparent pricing

Hiring tech talent through IT staff augmentation can be cost-effective. Also, the pricing is transparent making it easier for project managers to stick to a budget. Here at Swyply, we set a daily rate for a developer. This daily rate is multiplied by the number of days worked and then you receive an invoice. You will have 14 days to pay the invoice.

There are no hidden costs, startup fees, etc. It’s black and white. We want to be transparent with our customers because we understand the importance of sticking to a budget, especially now during times of 👉 economic downturn 👈.

Colleagues giving a fist bump during the development process due to positive company culture

Maintain positive employer branding & good company morale

Employee turnover can negatively impact employer branding and company morale. There is a way to switch software developers and scale your team without these negative effects. Using IT staff augmentation everyone understands that new hires are temporary. Therefore, there is no attachment and there is thumping and moaning when they have to leave. Moreover, it doesn’t reflect poorly on your brand if you are expanding and collapsing your team with IT staff augmentation to meet market demands.

Also, you add temporary coders to join your team that fit your company culture. This way you can avoid a toxic workplace. Augmented teams integrate seamlessly with your in-house teams making it easy for you to maintain good company morale.

What are the actual costs associated with using the IT staff augmentation hiring process?

So we briefly mentioned the fact that hiring costs with IT staff augmentation is transparent. Let’s get into this in a little more detail by looking at the types of new employees you can hire and what the cost may be.

Here at Swyply, we break down the 👉 cost of hiring an augmented developer 👈 into three categories of programmers. First off we have junior developers, so these are individuals who have 1 to 3 years of experience in a particular tech stack. The hourly rate for a junior developer is from $30 to $40 per hour. Next, we have mid/regular developers, these are people who have 3 to 5 years of experience in a specific tech stack. The average is $40 to $60 per hour.

Lastly, we have senior developers who have 5+ years of experience in a tech stack. Moreover, they can also take the position of a tech leader to help with organizing tasks. Also, Swyply developers can consult on various technical solutions to make your project better. The cost of hiring a senior developer will come to $60 to $90 per hour.

Now if you are considering hiring a dedicated team, you can usually get a discount as you are hiring 2 or more developers.

Woman working with finances on the table. She is calculating cost efficiency

Where do you get the most value for your money? In-house vs IT staff augmentation?

You may be wondering where you get the most value for your money. Well, this depends on many factors. Let’s explore this a little bit.

Value of hiring using in-house recruitment

In-house recruitment involves hiring permanent employees to fill IT positions within your organization. This option ensures a long-term commitment which means the employee gains a deep understanding of your company. Your in-house employees are more likely to align with company goals. But some downside is this process is expensive. In-house recruitment involves expenses like salaries, benefits, training, equipment, and infrastructure. This can be more expensive than external options. Also, relying solely on in-house resources may limit your access to specialized skills. Finally, in-house recruiting is a long process. Hiring and onboarding new employees can be time-consuming, potentially delaying project timelines.

Value of hiring using IT staff augmentation

Now let’s look at the other side of the coin. 👉 Staff augmentation 👈 involves hiring external professionals to supplement your existing workforce. It’s a hiring solution for project-based needs. This hiring model allows you to scale your workforce as needed, avoiding long-term employment costs. Moreover, you gain access to a diverse pool of professionals with specialized skills and experience. Not to mention you gain software developers quickly which will help speed up project timelines. Lastly, you have the flexibility to scale up or down based on project demands. Some cons with this solution are no long-term commitments and the need for onboarding.

To determine where you can get the most value for your money, you should assess your specific project requirements. You need to also look at your budget. Finally see what your timeline is, and long-term goals. In some cases, a combination of both approaches may provide the best balance. This way you can leverage the strengths of in-house resources for core functions. While using staff augmentation to supplement specialized or temporary needs.

Two women discussing the cost of hiring in-house vs IT staff augmentation which model is worth it

TL;DR: Summary of the prices of hiring in-house vs IT staff augmentation services

Let’s quickly summarize the cost of hiring in-house vs IT staff augmentation. Some key considerations when looking at the cost of hiring in-house vs. IT staff augmentation include commitment length, time to hire, and bench. The in-house recruitment process involves a long-term commitment. But the hiring process also lasts significantly longer and you are stuck paying to keep employees on the bench.

Whereas, with IT staff augmentation you can temporarily hire coders for both short-term and long-term projects. Moreover, you can hire someone in as little as one week. Finally, the provider covers the cost of keeping a coder on the bench.

You can also expect risk with each of these hiring models. Using traditional recruitment to may need run into massive layoffs like many other tech companies. Moreover, if you are a startup you may receive less money from investors who are tightening their belts. Now when it comes to IT staff augmentation you risk hiring the wrong person. But this can be remedied with a 14-day guarantee period. Also, short-term staff augmentation may not always be cost-effective. If you have a long onboarding process for a short project, you may not save money using this model. 

In-house vs. team augmentation costs

Some costs you need to take care of with in-house recruitment include: 

  • Recruitment
  • Employee benefits
  • Employee training & raising competencies

These expenses can grow to be quite exponential, whereas with IT staff augmentation you only need to pay the daily rate of the developer you are temporarily hiring. 

Lastly, let’s mention some of the benefits you gain by choosing IT staff augmentation vs in-house recruitment. IT staff augmentation enables you to access niche experts and industry experts. Moreover, you can hire someone in as little as one week. Finally, you are able to maintain a positive employer brand while scaling your team. 

When you are trying to compare the cost of hiring in-house vs IT staff augmentation, you also need to see which gives you more value. You can figure this out by looking at your timelines, budgets, and goals. Many companies find that a combination of both in-house recruitment and team augmentation is the winner. 

Want to learn more about the costs of hiring in-house vs IT staff augmentation? 👉 Drop us a line 👈, and let’s chat. We can have a free no obligation chat, about which option is the right choice for you.

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