The Strategic Advantage of Subcontracting in IT Staff Augmentation
IT subcontracting is a part of staff augmentation and outsourcing services where specialists are temporarily hired to work on specific tasks. Here, we’ll discuss how subcontracting in IT staff augmentation works and the benefits and challenges to consider when implementing the model. IT staff augmentation has become a popular business model in recent years. From small businesses to multinational companies, many organizations are turning to outsourcing and staff augmentation to bridge the talent gap and hire experienced professionals quickly. According to statistics, the global IT staff augmentation market is expected to grow at a CAGR (compound annual growth rate) of 13.2% to reach $857.2 billion by 2031. Simply put, staff augmentation is the process of expanding an internal team by hiring temporary experts from a third-party provider. For example, you require a diverse team of data scientists, data engineers, analysts, and software developers. Instead of conducting a full-scale recruitment program, you contact an IT staff augmentation company and share your requirements with them. The service provider will shortlist the candidates as per your specifications and conduct interviews to finalize a team. The company will also take care of contract terms, onboarding, etc., for the new candidates to work on your project. Once the project is successfully completed, the team is dismantled. The external professionals are no longer associated with your business. They join another team for another client who requires their skills and knowledge. IT staffing companies offer various models to help clients augment their teams. One such model is subcontracting in IT staff augmentation, where outside experts are temporarily brought in to handle specific IT tasks. Let’s find out more about IT subcontracting and how it is beneficial to a business. What is Subcontracting in IT Staff Augmentation? Subcontracting is a part of the larger IT staff augmentation process. It is the process of recruiting external candidates with specific domain expertise to fulfill highly specific roles and responsibilities in an existing project. For example, company X wins the contract for a project and has to deliver it within a month. The company then gives a subcontract to another company Y or an individual to work on a part of the project or certain tasks based on their skill set. Company X is responsible for delivering the project to the client. So, even though Company Y is a small part of the process, the main contractor (Company X) takes responsibility. So, Company X is the contractor, and Company Y is the subcontractor. Together, they finish the project as per the specifications. IT subcontracting has become popular due to the increasing demand for experts from specialist domains. In this tech-based world, every business needs IT services in some form. Since maintaining an in-house IT team is expensive, the responsibilities are outsourced to other companies. These companies sometimes use the subcontracting model to ensure they fulfill the client’s demands successfully. Typically, subcontracting in IT staff augmentation focuses on the following services: There is a high demand for such services since many businesses are investing in digital technologies and using cloud solutions to manage their processes. How do IT Staffing Firms Manage Subcontracted Resources? The IT staff augmentation company finds subcontractors based on the project requirements, timeline, and budget. It can allocate resources to the subcontractor or ask the company to utilize its resources. Identify the Need Hiring IT subcontractors is a strategic decision. Every project may not need the services of another company or outside experts. So, the first step to managing subcontracted resources is to identify the need for their expertise. Compare the requirements with existing talent to identify the gap. This can be achieved through a quick audit. Then, the staffing company hires subcontractors (another company or freelancers) to fulfill these needs. The contracts are usually short-term or mid-term. The subcontractors may also work part-time since their roles are limited to certain tasks. Select the Partner The next step is to choose the right partner to sign the subcontract. This is vital since the software development staffing company is responsible for the project. If the subcontractor doesn’t deliver, it could mess up the entire project. Ideally, it is recommended to partner with another IT staff augmentation company or a managed service provider with the required domain expertise. This ensures that the subcontractor knows the stakes and delivers the required outcome as per the schedule. Consider factors like industry experience, portfolio, pricing, communication, and transparency when finalizing the partner. Sign the Contract Once the subcontractor has been found and the terms have been set, it’s time to finalize the agreement. Sign a contract listing the T&C and other details. The IT staffing company is the prime contractor and the other company offering specialist tech staffing solutions is the subcontractor. Typically, the prime contractor wins a bid for a large project and delegates portions of it to one or more subcontractors based on their expertise. The deliverables, timelines, payments, etc., are clearly mentioned in the agreement contract. Project Management The IT staffing company appoints a project manager to supervise the entire project and interact with the subcontractors. The subcontractors use the communication tools/ channels provided by the prime contractor to collaborate on the project. The extent of interactions between subcontractors and other professionals will be determined by the project manager based on the requirements. This is done to limit confusion and facilitate seamless communication. It also helps in preventing data leaks by limiting access to sensitive information. Performance Management Since the prime contractor/ IT staff augmentation company is responsible for the project, it monitors the tasks and developments to measure the performance of subcontractors. If a subcontractor is unable to deliver, the contract terms might be revisited. The subcontractor may have to replace the candidates with others to ensure the project is not disrupted or delayed. There will be feedback and evaluation, regular reports about progress, check-in meetings, etc., to ensure quality and adherence. How Does Subcontracting Differ From Direct Staff Augmentation? Direct IT staff augmentation is where the business hires
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