Recruiting talent is a costly and time-consuming venture, and unless you are a staffing agency, it probably is not your core business. No matter how effective your internal HR is, a company dedicated to recruiting and matching talent to opportunities will likely be better. While hiring full-time employees is a long-term investment, you may have short-term capacity needs that require scaling up and down much faster than the traditional hiring process.
This is where staff augmentation – outsourcing workers with specific roles or skills – has been successful for many companies faced with these challenges.
Augmentation is especially helpful in fields such as IT or engineering, where highly specialized labor for large projects is often a requirement. As these skills become more specialized, recruiting full-time employees in specific markets becomes exponentially more costly. Being free of local markets and hiring processes allows companies to become more sustainable and profitable while consistently meeting the demand for capacity.
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So, what are the common challenges that employers face when trying to staff their business, and how does staff augmentation help overcome them?
1. The hiring process is costly.
There are many expenditures involved in the hiring process. Studies show that, depending on the skill level of the position that needs to be filled, employers often spend more than double an employee's yearly salary on recruiting and training expenses.
The Center for American Progress conducted a study showing that it costs 16 percent of an annual salary to replace an employee making under $30,000 per year, 20 percent for midrange positions (up to $50,000 per year), and 213 percent for highly educated executive-level positions. These expenditures are racked up through costs associated with recruitment postings, advertising, professional memberships, job fair sponsorships and college recruiting trips. Such costs can often total $3,000 to $5,000 – before any money has been paid to the new employee. Tack on salaries, benefits, healthcare, and payroll taxes and the cost skyrockets.
With the staff augmentation approach, workers are paid only for the time they actually work. There is no recruiting expense. These workers are selected because they come equipped with the necessary skill set for the job, so they need very little training or time to acclimatize to a position. In general, they hit the ground running.
3. The hiring process is lengthy.
Companies often need extra help in the event of sudden firings, resignations, acquisitions, or large-scale projects that exceed the capacity and capabilities of current staff. It is important to fill these vacancies quickly, or the productivity of the entire business may be at risk. The problem lies in the time it takes to find, onboard, train and set a new hire to the task at hand.
Glassdoor estimates that it takes roughly 23 days to complete the hiring process. That number can grow or shrink depending on the specific hiring practices of the business. However, methods such as phone interviews, in-person interviews, panel interviews and skill tests are time-consuming processes that also require significant investment. Once a candidate has been selected, background screenings can add another week to this timeframe. If the candidate does not accept the position or their screenings turn up worrisome results, you're back to square one. Additionally, when someone is hired, it normally takes a period of two weeks to a month of training before they are operating at peak efficiency. At higher levels of management, it may take months before achieving measurable results.
Augmentation personnel are at your disposal within days. They are also often experts in a specific skill you need in-house, so not only do they not require training, but they add value as thought leaders and subject matter experts. The turnaround time for full productivity clocks in at under a week, as opposed to just under a month. This affords business owners the opportunity to hit the ground running when unexpected pitfalls or opportunities arise.
3. Turnover is high.
As the economy improves, it becomes more competitive to keep skilled employees on staff. Gone are the days of the Great Recession, when even the most skilled professional was just thankful to have a job. In 2013, employee turnover rates in technology in the U.S. were 15.1 percent. But by the end of 2017, that number jumped up to 18.5 percent. Voluntary turnover, meaning that an employee willfully leaves an employer (not due to factors such as retirement or health), reached 13.5 percent in December. That is an increase from 9.1 percent just five years ago.
In specialized skill industries such as IT, where turnover is historically high, this is called "IT attrition." Studies put the current rate of IT attrition at 40 percent, meaning almost half of all skilled IT professionals are looking to change employers.
Augmentation addresses this issue directly and comprehensively, providing employers with a steady, consistent capacity and workforce. If a worker decides to change employment in the middle of your contract, the outsourcing vendor will replace the worker with someone of an equal skill set within a reasonably short timeframe. Random resignations need not disrupt the productivity of any deliverables, let alone an entire team or office.
Augmentation saves money and time, and solves the problem of employee turnover. Any company with a combination of growth potential and a highly skilled, technical staff should seriously consider this option.