“The reports of my death have been greatly exaggerated.” – Mark Twain, American author and humorist
For years, the business model of and precursor to modern IT outsourcing – staff augmentation – has been designated as dead. In fact, this notion of staff augmentation is so pervasive that even the providers of these services tend to deny or hide that it is the business in which they operate. For example, I know one US$400 million firm that has grown its top line revenue by 30 percent in the last 12 months. Yet go to its website, do a search on staff augmentation, which constitutes US$250 million of its revenue, and no results!
But the reality is, when you look at the financials of the large and small offshore IT services firms, much of what they are doing for their customers is simple staff augmentation, either on an individual or project level. Supplying qualified people to IT shops for temporary work to help headcount/budget stressed organizations get done what needs to be done is a booming business, and has been for the last 18 months. It’s a straightforward case of demand and supply.
However, use of staff augmentation firms is becoming increasingly challenging for the buy-side. Roles with similar titles – such as database administrator with five years experience, and several varieties thereof – mean different things to different people, and the rates may vary dramatically from firm to firm for what is the same delivered service. Yet in their quest to find the “right” talent, customers are increasing the number of augmentation firms with which they engage. One large bank I know of has a portfolio of more than 125 service providers supplying more than 3,500 people! This type of overload provider environment is exceptionally complex to manage.
All of which is to say… the staff augmentation business is booming, and that is good for both buyers and providers. But it does demand a new paradigm of service provider management, including clear role rationalization, metrics for measurement firm to firm and a center of excellence that manages the process.
Let’s recognize the existence of staff augmentation, and let the vendors be proud they do it. And in its recognition, we can develop process and techniques to improve and manage it for the benefit of the customer.
Knowing that Mark Twain was alive allowed his stature to increase, and the same can be true for staff augmentation.