Freelance vs staff augmentation, which is the best option for my software project?
The developer shortage crisis
The COVID-19 pandemic and resulting quarantines in 2020 accelerated the adoption of digital technologies, forcing companies to adapt and find ways to maintain business operations. This resulted in a worldwide increase in demand for software developers and related careers and a shortage of skilled labor.
The digitization of business, mainly through e-commerce, became necessary, leading to increased demand for resources and higher costs for skilled labor. To remain competitive in the rapidly digitizing market and reduce costs, companies in developed countries such as the United States have adopted remote work, making nearshore and offshore models increasingly relevant globally.
The shift from physical to virtual activities is accelerating, as evidenced by an 80% increase in online shoppers globally from 2020 to 2022 (eMarketer).
In 2023, the shortage of software engineers will reach its highest point, with 40 million jobs currently unfilled due to a lack of qualified talent. This number is projected to grow to 85.2 million by 2030.
Which contracting model should I choose for a software development project?
Companies have various options when developing a software project, such as building an in-house software engineering team or outsourcing services. These outsourcing options can include nearshore, offshore, or onshore services and are executed through different contracting models. The Freelance versus Staff augmentation contracting models will be explained in this context.
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FREELANCE
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STAFF AUGMENTATION
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Definition A freelancer is a self-employed person who provides services to clients on a project or contract basis |
Definition The term “staff augmentation” refers to a practice where a company hires a third-party vendor to provide staff for a project or to perform specific tasks. |
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They are not committed to a long-term employer and may work for several clients at the same time |
The short-term commitment of “3 months”, medium or long term, depends on the contract |
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It is not stable over time. The Freelancer can choose to start another job and leave his current employee |
Stability of professionals |
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Direct management of payments, benefits, or any other economic agreement that has been agreed upon |
Centralization of payments in a single company. Regardless of the number of development resources |
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The exponential increase of administrative management depending on the number of freelancers |
Simplified administrative management. Generally legislated by a framework contract for the provision of resources |
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It is not scalable because freelance hours are limited |
It is scalable because the company can provide as many software professionals as the customer needs |
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There is no redundancy. That is, if the Freelancer gets sick or has an event that does not allow them to work, the work has stopped |
It does offer redundancy. If a professional takes a vacation or another event occurs with the outsourced resource, the company provides a new one |
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Low costs |
Slightly higher costs, but with a more comprehensive service |
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Higher turnover and lower stability over time |
Lower turnover and greater stability over time |
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No standardized procedures |
Highly technical and with standardized procedures |
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No formal, documented growth plan because he is a sole proprietor |
Professional resources growth plan. Training, promotions, etc. |
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The Freelancer can only take on a minimal number of projects. In many cases, freelancer will not take on new projects because him development capacity has reached its limit |
A developer outsourcing company can work with a wide range of clients of all sizes |
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In many cases, the Freelancer cannot be replaced due to poor performance until the Freelancer finishes the project |
The company may replace a team member for performance reasons expressed by the client |
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Resolving tedious disputes on specialized freelancer recruitment portals |
Dispute resolution directly with the company about the team members |
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Partial dedication to a single project |
Full-time dedication to a project |
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High response time |
Low response time |
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The validation of technical skills will depend on the contracting company or, the selection criteria will be based on the qualifications of other clients from past projects |
The validation of technical skills will depend on the company that provides the Staff augmentation service |
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Reduced legal controls to enforce confidentiality agreements |
Increased legal controls to enforce confidentiality agreements |
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Trial and error process for companies interested in hiring quality Freelancers |
Standardized technician recruitment and selection process. Guaranteeing first-class professionals |
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Freelancers focused on finishing their work instead of software quality, increasing technical debt, the number of bugs, and the correct structuring of the application |
Dedicated code quality resources, frequently with automated code review processes and compliance with best practices |
To determine the best form of contracting for your company, it’s important to weigh the pros and cons and consider your company’s specific needs. Whether building an in-house development team, outsourcing to a software factory, or working with a freelance professional, each model offers unique opportunities for your company’s technological growth.
When making your decision, ask yourself the following questions:
- Is the software technically demanding?
- Is it challenging to find the right developer in the job market?
- Do I have the skills and resources to build a team independently?
- Do I have the knowledge and experience to manage the project alone?
- Does the software require specialized expertise in multiple technologies and programming languages?
- Do I need short-term or long-term support?
Why Staff Augmentation is better than freelance
Staff Augmentation provides a more reliable and stable resource for a company’s project needs. Unlike freelancers, staff augmentation professionals are dedicated full-time to a company, providing higher commitment and accountability. Additionally, staff augmentation allows for better communication and collaboration within a team and improved management and support from the company. Furthermore, staff augmentation typically includes benefits such as paid time off and health insurance, which freelancers often do not receive. Staff augmentation offers a more comprehensive solution for companies looking to supplement their workforce.
What are the most sought-after professional profiles requested for a Software Development Project?
Although it is possible to hire good Freelancers, this model is only advisable for small projects or projects with tight deadlines. Companies that hire Freelancers in software development usually have small budgets and tight deadlines.
The software industry has many roles or profiles that can be part of a software development team. However, the structuring of groups will depend mainly on the needs of each client and the maturity level of the life cycle of the software development process of each company. The following are the most common positions that can be found in outsourcing models:
- Software Development Engineer (SDE)
- Frontend
- Backend
- Software Test Engineer/Quality Assurance Engineer (QAE)
- DevOps Engineer
- Cloud Support Engineer
- Cloud architect / Solution Architect
- Software Architect
- Data Analyst
- Data Engineer
- Data Scientist
- Security Engineer
- Project Manager
- UX/UI Designer
- UX/UI Researcher
You don’t have to limit yourself to a single hiring model
Many companies opt for a combination of recruitment models, seeking external assistance to boost their development capabilities. There are several options, so selecting the one that best fits your company’s needs is essential. If you’re interested in exploring the staff augmentation subcontracting model or have any questions, we would gladly arrange a call with your organization.
