Today, outstaffing has gone mainstream—organizations spend nearly $500 billion сevery year on global IT staffing services to keep up with the competition and maximize profits. The model has become the go-to strategy for many businesses, including big players in Silicon Valley, such as Apple, Google, Slack, Shopify, Meta and Slack, among many others. 

Staff augmentation enables businesses to escape traditional hiring bottlenecks. However, this only holds true if they know the outstaffing mistakes to avoid. Without the right approach, outstaffing can quickly turn into a costly mistake. In this article, we delve into the world of staff augmentation, provide expert guidance and practical tips to avoid outstaffing mistakes to set your business up for success. Read on!

Why outstaffing?

Outstaffing is a popular remote hiring model in the IT and software development industry. It involves establishing a dedicated team of professionals recruited to match your business needs and requirements. Unlike traditional outsourcing, outstaffing has numerous business benefits, including:
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• Greater team flexibility: the model allows clients to scale or downsize their team at any moment during the cooperation to meet dynamic demand needs.

• Heightened efficiency and productivity: a full-service outstaffing company ensures that your team is optimally productive by providing resources and measuring output through KPIs.

• Relatively affordable: outstaffing is more budget-friendly than full-time hiring as it lowers risk management and overhead expenses.
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• Greater control over remote staff: clients have the right to directly engage and manage professionals on the team, whether dedicated or distributed.
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• Reduced project costs: outstaffed employees often follow the best software development processes and methodologies to significantly cut the total project costs.

How outstaffing works

Outstaffing is a popular remote hiring model in the IT and software development industry. It involves establishing a dedicated team of professionals recruited to match your business needs and requirements. Unlike traditional outsourcing, outstaffing has numerous business benefits, including:

Hiring

The partner advertises job positions, shortlists candidates for primary screening and conducts a technical interview to evaluate whether they are a perfect match to your project needs in terms of technical and soft skills.

Onboarding

Another role of your outstaffing company is setting up a collaborative environment with the right tools and technologies needed for successful onboarding. Depending on the company's offerings, team-building activities may also be initiated at this stage.

Ongoing backend support

Remote hiring partners offer ongoing support on all project-related issues to facilitate seamless collaboration. This may include project tracking through local managers or issue resolution whenever your team members disagree.

The common mistakes to avoid in outstaffing

Outstaffing is best suited for companies that want to recruit skilled developers to work independently or as an extension of their existing teams. Other user cases for this engagement model include meeting tight deadlines or as a bridge for hire. That said, here are the common mistakes to avoid in outstaffing, whether you approach it as a short-term or long-term solution to your hiring challenges:

Mistake #1. Incorrect selection of outstaffing companies

The biggest mistake that many organization leaders make is partnering with the wrong outstaffing company. But why is this a challenge? First, a misfit partner will take longer to find value-matched talents, prolonging the time-to-market of your digital solutions. Moreover, if they don’t charge you exorbitant rates with endless hidden administrative costs, you’ll be frustrated with frequent communication breakdowns.

In the long haul, a quack outstaffing company will only expose your project to more risks and the last thing you want is to pay for low-quality work or switch to a different company when it's too late. That said, finding a reliable partner who shares and understands your goals, budget and expectations is important.

Solution

 Conduct in-depth research on potential outstaffing companies and evaluate them under the following criteria to find the best fit:
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‍• Experience and expertise: check out the company’s project portfolio to verify the level of experience and expertise they claim.
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‍• Hiring capacity: an outstaffing company with a global hiring capacity can help you recruit skilled talents from any location faster.
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‍• The communication system: the company should have open communication channels that continuously keep you in touch with the outstaffed professionals.
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‍• Cost-effectiveness: ideally, the full-service agency should be able to hire talents at relatively affordable rates and optimize engagement costs without sacrificing quality.
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‍• Technical infrastructure: the company should have a robust infrastructure that extends to the tools and technologies needed to efficiently complete remote tasks. 

Mistake #2. Communication issues

Failing to set up open and robust communication channels can heighten project risks in terms of misaligned expectations or complete failure. The challenges associated with this mistake include an inadequate flow of information between you and the remote team, which can lead to errors or unnecessary misunderstanding, slowing down the development process. 

Another overlooked issue around communication is the time zone difference. This is because working from diverse geolocations can mean a lack of clarity about an employee's availability or response rate. Consequently, holding general meetings or resolving urgent issues with everyone on board can be difficult.

Solution

To avoid this mistake, build a communication plan highlighting how often or which channels team members should use when passing project information across. This strategy should also mention the need for regular check-ins and status updates to help you track progress and ensure everyone is on the same page.

On top of that, you can leverage communication tools and technologies that allow the team to exchange messages and view notifications instantly, such as Google Chats. You can also integrate Zoom or any other viable video conferencing software for face-to-face communication and online team-building activities.

Lastly, you want to provide the necessary training and resources to help the team embrace the communication plan from the onset. To avoid confusion during collaboration, you can prepare glossaries or style guidelines to designate the language and terminologies everyone should use when passing information.

Mistake #3. Inadequate management of the outstaffed team

The Harvard Business Review notes that 23% of managers feel unconfident about managing a remote team of employees adequately. Management cuts across all core areas of the cooperation, from security and accountability to work dynamics, quality control and team cohesion. Making any mistake in a managerial role, such as failing to define roles and responsibilities, can lead to task duplication or disorientation from the primary goal.

Similarly, overlooking security compliance or reinforcement can lead to successful cybersecurity attacks with immense ramifications, such as loss of intellectual property. On the aspect of quality control and team cohesion, inadequate management can translate to decreased customer satisfaction due to substandard output or stalled productivity due to talent disengagement.

Solution

Although outstaffing companies offer a range of turnkey services to free clients from routine administration tasks, it’s your responsibility to ensure the managerial style is effective in serving your business needs and goals. With that in mind, you can do the following to optimize outstaffed team management:

• Track progress using various tools and hold regular meetings to foster a culture of accountability

• Establish a robust management structure for assigning and following up on tasks

• Create comfortable communication channels that encourage two-way constructive feedback for everyone to be on the same page

• Enact stringent security measures and data transfer protocols to minimize cybersecurity risks

• Develop quality standards and communicate clear expectations on deadlines, deliverables, or output scope

Mistake #4. Underestimating cultural differences

Cultural differences may affect how you engage with outstaffed employees. The effect will also extend to work ethics and values that guide key business processes in your organization. For instance, a difference in language, style, or tone preferences can distort information interpretation impacting productivity and the end quality.

Similarly, corporate cultures are diverse, influencing how employees work and approach projects. This means you can have one side of the team driven by individual achievement and competition while the other one relies on close teamwork and collaboration. If this is unresolved, the team may be unable to work effectively towards a mutual goal.

Solution

Besides inculcating an inclusive culture that embraces diversity from all aspects, you can offer induction guidelines for your organization’s routines, quality metrics and performance standards. This will help the remote employees learn your organization's cultural norms and align their input to match the expectations of key shareholders.

Another tip for managing this challenge is integrating local HR leaders or project managers with your outstaffed team to preserve the cultural integrity of its members. This can work well, mainly if you recruit from the same region or country.

Mistake #5. Poor knowledge transfer

The learning curve for new employees can be wide, requiring extensive training to inculcate a new concept or context. For instance, you may need to share knowledge about your business domain or break down the complexity of your system’s code base. In that process, the collaboration can turn chaotic if the team doesn’t get it right from the onset, culminating in quality inconsistencies or missed deadlines. Unless you do it meticulously, your experience will translate to wasted time and resources.

Solution

The best way to tackle knowledge transfer challenges is by eliminating silos in the process. In other words, it’s imperative to invest in tools and resources that allow outstaffed employees to learn and share knowledge efficiently. These tools should offer a user-friendly experience, complete visibility and granular transparency to streamline the knowledge transfer process.

Here are some tips to avoid outstaffing mistakes during knowledge transfer:

• Gather all the relevant project data and organize it in spec sheets, guidelines, or videos

• Develop a meticulous roadmap with easy-to-achieve milestones—this will help new employees digest the knowledge easily

• Choose the right person to handle the process

• Monitor and evaluate ongoing work to explain things whenever the team experiences hurdles

Mistake #6. Focusing on cost-savings alone

One of the key benefits of outstaffing is that it gives you a competitive financial advantage when hiring global talents with specific skill sets. For instance, you can recruit from developing regions, such as Eastern Europe, where top-rated IT experts charge relatively affordable rates due to the low or moderate cost of living.

However, focusing solely on saving hiring costs as much as possible can be a costly mistake. While your base pay may be standard with the hiring location, remote employees have evolving needs and expectations like their in-office counterparts. And lest you match their expectations, you’ll likely experience high attrition rates, given that 40% of IT talents prefer quick job changes when unsatisfied.

Solution

You can extend the courtesy of profit sharing with your outstaffed team by paying for their health and wellness programs. You can also enroll them in upskilling courses and offer new tools & technologies to support their personal development goals or plans. The goal is to tailor an offer that makes you a favorite employer among competitors who seek to hire people with similar skills at the same rates.

Mistake #7. Overlooking contract obligations and legal risks

Unlike freelancing, collaboration under the outstaffing model is guided by contractual obligations that every party must fulfill for a smooth experience and project success. However, it’s common to get into disagreements, especially if you want to negotiate terms of service midway after signing the contract:

• Payment disputes: you may want to adjust the timing of payment if your business is bound to face financial complications from time to time.

• Termination disputes: the terms and conditions of leaving the outstaffed team can lead to disagreements over the duration of notice required or billable work hours thereafter.

• Confidentiality issues: a disagreement can arise when someone on the team leaks or mishandles a sensitive document, but there is no framework for holding them accountable.

• Intellectual property disputes: outstaffed employees may disagree with you over licensing or royalties if they feel their human capital should be credited for the intellectual property.

Solution

It will help if you get better clarity of the contract between your organization and the outstaffing company to avoid unnecessary conflicts and project delays. Assess all the possible outcomes that may jeopardize the project and discuss them with the service provider before agreeing to a contract that gives you 100% control over challenges, quality, security and intellectual property rights.

Here are some questions to ask yourself before committing to a staff augmentation contract:
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• Are responsibility limits clearly covered in liability clauses?
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• What are the warrants for unforeseen delays or disruptions?
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• Are the conditions for issuing and paying invoices clear or flexible?
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• Are there any instances of ambiguity in the terms of service?
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• What are the penalties for non-compliance or non-adherence to agreed principles?

Wrap up

Optimizing IT and business processes or software development is not always about investing in new tools and technologies. The people you hire plus the engagement model they cooperate with are equally important.

Organizations that are struggling to fill vacant IT roles can always turn to outstaffing service providers to access skilled, business-ready professionals. Avoid the common mistakes in outstaffing listed here to optimize your engagement and accelerate time-to-market. For starters, contact us today to discuss which outstaffing model fits your business team, whether dedicated or distributed teams.