In order to track the costs of recruiting technology experts, you need to understand all the stages of the process. In this blog post, we will compare staff augmentation to traditional recruitment and take the reader through all the steps involved. We will also mention some additional considerations, such as the value of shared knowledge and team scalability.
Staff augmentation services vs in-house recruitment
Both team extension and traditional recruitment are valid approaches that have their own pros and cons. Their cost structures vary in several areas, which makes them difficult to compare.
When it comes to staff augmentation, the costs of finding and vetting the provider needs to be considered. These are much lower than recruiting in-house or through an agency, but the provider recoups their costs through a fee.
On the other hand, traditional recruitment involves finding qualified in house staff through job postings and the use of recruitment agencies. The cost associated with these methods varies depending on the salary range of the roles and the cost of advertising in different channels. For example, when looking for staff for a high-level role, a business may need to pay more for premium job postings or use executive search firms. For a mid-to-senior level software developer, the total cost of recruiting via an agency usually equals two months' of that person's salary. Recruiting in house can be cheaper or more costly, depending on the effectiveness of the process, the experience and skill of hiring managers, etc.
1. EB and recruitment marketing
When it comes to staff augmentation, the cost of recruitment and vetting the provider is all that needs to be considered at this stage. However, employer branding should not be entirely neglected, as it is usually crucial when building the in-house parts of the team.
For traditional recruitment methods, EB and recruitment marketing often require at least one person's full time engagement. They need to handle content production, social media presence and reach, internal communication of employee benefits, the regular gathering of feedback, and much more. This can be especially difficult to manage for smaller companies.
Whether you are using staff augmentation or traditional recruitment methods, sourcing new candidates is an important factor in tracking costs. When using staff augmentation, it may be necessary to source candidates from various providers, though companies like DEVTALENTS strive to always meet all of our clients' needs. Just like with recruitment marketing and EB, the costs of sourcing are not covered by the customer.
Traditional recruitment methods require job postings on different websites and platforms, with their associated costs, and cooperation with external recruiters. The involvement of in house team members in the process can be very time consuming and usually requires additional resources, such as a good candidate management system or paid Linkedin plans for recruiters.
3. Processing candidates
In the staff augmentation model, the processing of candidates is another step of the process that comes down to vetting the provider and ensuring that they have the right experience, skills and procedures. For example, at DEVTALNETS we use a quick but thorough vetting process that includes a CV review, phone screening, a practical recruitment task, and a final online interview. The total time that a candidate needs to spend during this process is about 5 hours. We have managed to strike a balance between respecting candidates' time, ensuring a high quality of service, and optimizing our work.
On the other hand, traditional recruitment methods involve screening candidates and conducting interviews in-house. This often requires the engagement of high seniority team members, as they are the only ones with the experience necessary to verify candidates' skill level. Additionally, creating a smooth, efficient recruitment process takes years at many companies - at DEVTALENTS, we have had more than a decade to perfect ours - and before it happens, many mistakes can occur, increasing the costs of the process.
4. Administrative tasks and formalities
The administrative tasks and formalities associated with recruitment can add up quickly. However, a staff augmentation partner like DEVTALENTS handles most of the formalities. Our clients sign a contract with us, not each individual software developer, and the same is true for fees. One complication of this model is that, if the client wants to provide team members with their own employee benefits or hardware, it is on them to handle it.
When recruiting in-house, a company needs to take care of everything, from taxes and compliance with local laws, through contract negotiations, to employee benefits, insurance, equipment, and so on. Tracking these costs can be incredibly challenging, as the tasks involved are usually handled by people from different teams and departments.
Onboarding - which means quickly preparing new employees to help them hit the ground running within the team - happens very similarly for staff extension and traditional recruitment. The hiring company provides training and onboarding materials, and, if necessary, handles travel expenses for on-site workshops and meetings. However, we have found that staff extension can offer shortcuts through these processes. At DEVTALENTS, each team member has all the support and preparation needed to quickly and seamlessly fit into any team, matching their toolkit, habits and culture. Additionally, we handle strictly formal elements of onboarding, such as signing documents.
Tracking the recruitment costs when hiring technology experts
The cost structure of team augmentation and in-house recruitment differ quite significantly. Staff extension is largely simpler to track, as it comes down to the provider's fees. For traditional recruitment, each stage of the process includes many puzzle pieces, some of which have been listed in the table below.
|Team augmentation||In-house recruitment|
|EB and recruitment marketing||Not relevant (handled entirely by the provider)||Time spent by team members (including on internal communication with the team and gathering feedback), paid promotion, content production|
|Sourcing||Finding and vetting providers||Time spent by team members, paid job postings on external platforms, cooperation with recruitment agencies or freelance recruiters, tool subscriptions|
|Processing candidates||Reviewing candidate bios, additional verification if required||Time spent by team members, preparing recruitment tasks, tool subscriptions, the risk of incorrect evaluation|
|Administrative tasks||Contract with the provider, additional requirements (e.g. the client’s own hardware)||Taxes, compliance, contract negotiations and legal advice, employee benefits, insurance, equipment, payroll processing|
|Onboarding||Onboarding materials, training (made easier with the provider’s support)||Onboarding materials, training|
One additional consideration related to recruitment is the value of knowledge sharing, and the ease with which team members can provide this value to the company. Staff augmentation can be a great way to bring in experienced staff quickly and with minimal overhead costs. At DEVTALENTS, we have built a culture of close cooperation and knowledge sharing, which means that all of our team members are usually happy to go out of their way to use their skills and experience for others' benefit.
However, to fully take advantage of this added value, clients need to have processes in place for recording and disseminating knowledge, such as internal workshops or training, a knowledge base, and documentation.
When recruiting traditionally, the assumption is the new team members will stay with the company for a long time. This allows for knowledge sharing to occur more naturally over time, though it may still require setting up teaching opportunities. It is difficult to compare the costs of gaining more knowledge, as each case is different, but it is worthwhile to remember about this aspect of expanding a team.
Scalability and flexibility
The scalability of the team, as well as its flexibility, can have a huge impact on its maintenance costs. With staff augmentation, teams can be scaled up and down quickly depending on the project requirements. This allows for greater flexibility in terms of budgeting and resource allocation. With traditional recruitment methods, it can be more difficult to adjust resources on a short-term basis, which introduces more risk and makes the cost structure less optimized at times.
Choosing the right hiring process and approach
Overall, tracking the costs associated with staff augmentation or traditional recruitment methods can be challenging. It is important to consider all the factors discussed above in order to determine which type of recruitment process provides the most cost-effective solution for your organization. With careful consideration and analysis, it is possible to identify which recruitment method best fits your organization’s needs and budget.
By taking into account staff augmentation and traditional recruitment methods, their associated costs, and the additional considerations of shared knowledge and team scalability, you can make informed decisions that will help to save your organization time and money in the long run.