The best 20 minutes about Staff Augmentation
Rob and Jay have a few things to say about the practice of staff augmentation, especially with how it can impact the culture and delivery value of high-performance product teams.
Hosted By
Rob Hall
managing director
Jay Cosgrove
senior product manager
Episode Transcript
Rob Hall: Jay it appears that there’s a tropical storm and coming are you ready?
Jay Cosgrove: Ready or not? Here it is.
Rob Hall: Okay, but do you have a taster’s choice in your cup?
Jay Cosgrove: I do not.
Rob Hall: Okay, good. That’s disgusting.
Jay Cosgrove: We here in beautiful Alpharetta have the luxury of having Avalor coffee, which will change your world.
Rob Hall: Yeah, Valor coffee the, yeah, those folks are really great.
Jay Cosgrove: I text one of my friends this morning after I got a cup and I said every time I have a cup of coffee, I question all my other coffee choices in life. Like why even do it?
Rob Hall: To be fair, where I live up in Jasper, we have some good coffee houses. And interesting.
Jay Cosgrove: I wouldn’t call that.
Rob Hall: Yeah, it’s Well, a lot of them are relatively new, which has been nice. Because Valor was definitely my go to for quite a while.
Jay Cosgrove: Yeah. And then the pandemic.
Rob Hall: Yeah, exactly. Exactly. And I’ve missed them.
Jay Cosgrove: Yes.
Rob Hall: So rare that I’m down here now.
Jay Cosgrove: Yes.
Rob Hall: To get to enjoy their delicious hot coffee.
Jay Cosgrove: And anyone driving through Alpharetta. It’s a strong recommendation.
Rob Hall: Yes.
Jay Cosgrove: Really I mean, you just won’t be disappointed by the staff or the actual product. It’s amazing.
Rob Hall: It’s superior. And to be clear, they’re not sponsoring this podcast.
Jay Cosgrove: No, no. I mean, I’ll take a sponsor, but I don’t. They’re definitely not.
Rob Hall: Yeah, we just love them.
Rob Hall: This is the experience lab, the official podcast of digital scientists from Atlanta, Georgia. We’re an experience lab that explores and builds digital products. My name is Rob Hall, and I’m the Senior Director of Product at DS.
Jay Cosgrove: And I’m Jay Cosgrove, senior product manager.
Rob Hall: Thanks for listening.
Rob Hall: So today, we’re having a discussion about staff augmentation. We want to talk about what that phrase actually means because it carries with it a number of interesting connotations. So let’s take just a quick second, before we dive in and define clearly what staff augmentation means. And I think the definition that we might agree on, is just the act of taking your team and making it larger.
Jay Cosgrove: Yep.
Rob Hall: Faster than what it takes to typically hire new employees with less overhead risk.
Jay Cosgrove: Yep.
Rob Hall: So I’m going to utilize typically a staffing agency of some form. And I’m going to request 10 developers or three designers or 10 product managers, whatever it is, based on the volume, and based on an hourly rate.
Jay Cosgrove: Yep.
Rob Hall: So I’ll have a contract that may have an overall kind of target number of how many hours are being contracted per month, and a headcount.
Jay Cosgrove: Exactly.
Rob Hall: If I’m a Product Owner, for example, let’s take, what’s a good example that we can use and not get in trouble with?
Rob Hall: So okay, let’s just say I’m a SaaS company, right? I’ve built a team, I’ve built a product from the ground up, and we’re generating millions of dollars in revenue each year, why in the world? Would I want to take some portion of my product and have a team of people that I don’t even know, potentially overseas, or here stateside, but are not actually my employees? Why would I want them to come on board my team and a contractor type relationship, not as an employee to contribute to, to the product that I’m trying to build.
Jay Cosgrove: I think the most common answer to this is increase in velocity. So if you’re, if you’re successful in the description you just gave with your product, and you’re wanting to add more features. And it takes a while to hire, and it takes a while to train. And if you already have an existing relationship with a staff aug agency, then it’s probably a lot easier to strike up a contract with them, and get the headcount that you need to build the feature that you need.
Rob Hall: So scaling staff?
Jay Cosgrove: Yes scaling staff, I think, the nature of staff augmentation, and how I would probably define it, is that you’re hiring a team to do what you say, and not really do a ton of thinking on their own. And it’s not to say that every relationship is that way. There’s certainly lots of good healthy staff augmentation models that are more contract terms than they are actual in relationship of how they relate to one another. But at the end of the day, you’re hiring headcount and you’re not really hiring someone to do a project, even though it might be for a project. You’re hiring them to really do what you say and you’re going to manage them.
Rob Hall: You talk about it being difficult to hire new employees.
Jay Cosgrove: Right.
Rob Hall: Right. So if you think about the difference between an employee your traditional employee relationship versus a contractor relationship, there’s a greater degree of commitment to an employee.
Jay Cosgrove: Exactly.
Rob Hall: Then there is a contractor.
Jay Cosgrove: Potentially more cost to.
Rob Hall: Sure. Absolutely. There’s more costs, particularly with taxation and health benefits and things like that.
Jay Cosgrove: Yeah, definitely.
Rob Hall: You mentioned velocity. And that’s something we’ve experienced before a digital scientists were even even the work we were doing, being an agency that’s typically in a work for hire relationship, where our clients decided to take work they were sending to us and send it to a staff augmentation group, under the guise of getting to move faster. What do we actually experienced with that? Does the intended result happen?
Jay Cosgrove: It really depends on the project, I think, but most of the time, and this is the reason staff kind of gets a bad name for itself. It’s not going to turn out super well, for I would say mainly for the agency. And it really depends on how the agency is set up, though.
Rob Hall: You’re referring to the staff augmentation agency?
Jay Cosgrove: Exactly, yeah. And so and this kind of goes into our next point here a little bit, but agencies will have a variety of models that they sell, you know, so we can do a full project, we can do all the thought work, we can do just the dev work, we can do the design work, there might be different deliverables or, or services or approaches that they take whatever you want to call it. And when you go to the place of hiring out your staff, then that really is when it turns into staff fog. And at that point, you’re pretty much giving your team members to someone else to manage in a very highly integrated way into their culture, their platform, their project, and leaving kind of the thought work or any personal ownership out of it. So the pluses of this, I would say is that in that project, you’re going to get a lot more integration, potentially, because they’re almost treated like employees for the client. But, but that comes at a cost.
Rob Hall: The cost being hiring a team with an opinion.
Jay Cosgrove: Exactly.
Rob Hall: Right. So if you’re, you’re looking for, it’s a terrible analogy, but in some ways, it’s like hiring factory workers.
Jay Cosgrove: Yeah.
Rob Hall: And not that there’s anything wrong with a factory worker,
Jay Cosgrove: Exactly.
Jay Cosgrove: Yep. Exactly.
Rob Hall: Serve differently, they serve a very important function. But the expectation is that they’re doers, that they’re doing a fairly prescriptive set of tasks. And there’s a high degree of expectation around just volume of production. In this case, you’re expected as a contract developer to come into a team and generate code.
Rob Hall: And, and not really provide a whole lot of constructive feedback, yeah, or lasting value beyond the execution of that particular task.
Jay Cosgrove: Yeah, you’re not the plus for the agency here. And I’m probably going to seesaw between like pluses and minuses. The plus here is that there’s little risk for the actual outcome of the project on the individual contractor or staff auged member, right? Because that risk is going on the pm and the internal team, mostly, in my experience, because you’re really just being brought in as a team member. So as long as you do the work assigned to you, that’s all you have to think about. The actual outcome, does this feature, do what it needs to do? does it serve the customer in the way that it needs to serve? Not only are you usually not even asked that question, but you are generally not held accountable for it, which is good and bad. I mean, like you’re pushing the risk on to the internal team. But also the negative of that is that you have really good ideas as an individual. And at Digital Scientists, and I’m sure so many other agencies across the world, we hired problem solvers. And we want our team to think critically and always be involved and have a voice. And in staff aug, that’s not always the case.
Jay Cosgrove: What would you consider another minus here?
Jay Cosgrove: In my experience dealing with this issue of stuff, talk, I, there’s a couple of different scenarios. And part of it is what you’re talking about in terms of expectation programs. I and that’s not to say that there aren’t an incredible quantity of very talented people that work for staff aug agencies, right. And there’s several in town here in Atlanta that I have a lot of talented people working for them.
Jay Cosgrove: Yeah. And we work with them on other projects.
Rob Hall: Oh, yeah, for sure.
Jay Cosgrove: It’s awesome.
Rob Hall: And not just as developers, like I’ve worked with a lot of project managers and product managers over the years who were contractors through an agency. And a lot of them were just very intelligent, hardworking people. The problem I see is this is you’re not finding a real partnership that has a sense of ownership over the outcome of the product and typically you’re, you’re dealing with an agency that’s billing your organization by the hour.
Jay Cosgrove: Yep.
Rob Hall: So it’s $80 an hour.
Jay Cosgrove: Yeah.
Rob Hall: $95 an hour, whatever it is.
Jay Cosgrove: Yeah. For those that remember our contract discussion, this would be more than likely going to be a time and materials contract.
Rob Hall: That’s right.
Jay Cosgrove: Yeah.
Rob Hall: And so also harkening back to our OKR conversation, and, and looking at the desired performance outcomes for the organization. If you’re an employee, or even an entire team that’s in a staff fog situation, that’s billing by the hour. That’s really your only metric.
Jay Cosgrove: Exactly.
Rob Hall: Is am I fulfilling these tasks over in a certain amount of time?
Jay Cosgrove: Yeah. Are your hours in?
Rob Hall: Exactly. And so there’s, there’s no, there’s no real consequences other than the contract coming to an end.
Jay Cosgrove: Yep.
Rob Hall: There’s not but there’s also no no additional upside either.
Jay Cosgrove: Yeah, right, not really.
Rob Hall: So you as a contractor, or as a contracted team could perform really good work, and help drive those outcomes. But you don’t stand to gain any of the upside either.
Jay Cosgrove: Yeah. And we talked about this in the time materials contract episode, is when you perform really well you find efficiencies, you find ways to outperform your estimates, you’re actually hurting your own company, because you’re billing less hours potentially for that. And again, this all comes down to how it’s scoped. You know, you may have a project where you’re guaranteed 40 hours, whether you have 40 hours worth of work or not, at that point, it’s probably more of a retainer. But still, you might have some kind of weird hybrid contract. But like Rob, saying, there’s a lot of the time just not a lot of upside to it.
Rob Hall: Upsides an interesting thing, right? So get can the owner of a staff augmentation agency generate a great degree of profit –
Jay Cosgrove: Yes.
Rob Hall: As the owner of the company, yes, absolutely.
Jay Cosgrove: Yeah. But you’re selling labor, you’re selling labor.
Rob Hall: Right, you’re not necessarily selling vaught work?
Jay Cosgrove: Yep.
Rob Hall: You’re not necessarily selling strategy.
Jay Cosgrove: Yep.
Rob Hall: And just selling people by the hour.
Jay Cosgrove: And you’re potentially hurting culture, a big thing I’ve seen is team morale. So when you have a team, and as a PM, you you’re very aware of this, because it’s part of your job, the morale of the team is a really big deal, right, and you got to keep spirits up, especially when projects are really tough, or timelines are really tough. And when your staff auging your team, that is totally out of your control. And the day to day work, culture is mostly dictated by your client. So again, you could have a situation where you have a great client, and it works perfectly. But that’s generally the minority of times because if a client is asking asking for staff org, what they’re pretty much saying is, let me do the thinking for you. And just give me your your dev team and or your design team, and to do the work that I dictate. And that just in a statement by itself, like Rob saying, kind of reeks of not being much of a partnership. And really just more of a, you know, I’m not ready to hire employees yet. And you guys are more or less expendable, but we’ll use you for the time being.
Rob Hall: What are some concrete examples of where it does make sense to hire a team in this traditional staff augmentation model, where where the request is not I have this problem that I’m trying to solve, but rather, I need 10 developers?
Jay Cosgrove: I mean, if you’re part of a big SAS, or like you said, and you’re the PM, then Honestly, this could be you looking for stuff aug. And in that case, if you’ve got a good culture, and you’re aware of all these things that we’re saying, for the staff, on the other end, they might be hiring. I think that makes sense. You’re, it’s back to velocity. Really, it’s like you’re wanting to improve it you’re wanting to bring on the team. And maybe there’s a glimmer of hope on the other side of like, well, this works really well, you know, we could bring on some of the staff full time, or we could acquire the company. You know, there’s a lot of options of how this stuff goes. But the main point is, you’re bringing on team members quickly, that are generally highly skilled and have some sort of guarantee from the agency that you’re hiring them from, that they’re going to perform in a certain way. And then it’s also expendable based on the terms of the contract. I think a good question after that, too, is what is the plusses potential pluses for an agency selling staff aug? Because sometimes you’re kind of forced in into a corner to do it, honestly.
Rob Hall: Yeah. So we’ve, it’s interesting, we’ve been on kind of both sides of this debate before. I can think of one case where our team was hired by a client to really focus on on driving value, right, not just completing a set of tasks, but but to create certain outcomes for a startup that we were doing work with. And the company at some point had had come to the conclusion that they could get more done faster and for less money, if they just hired a big group of developers overseas, and offshore all of the work well, six months later and several hundred thousand dollars And zero delivery, they came back to us and said, We need help. We’re in serious trouble.
Jay Cosgrove: There’s the accountability thing, right?
Rob Hall: That’s that accountability thing.
Jay Cosgrove: Yeah.
Rob Hall: But it’s also processing methodology. And so yeah, you can throw 50 developers at a problem.
Jay Cosgrove: Yeah.
Rob Hall: And hope that something comes out the other side. But without good process, good methodology and good culture, you’re gonna have a harder time accomplishing great work. And so given more runway, could that team have delivered eventually? Yes, they would have, but they didn’t have an endless amount of of resource to continue spending and continue iterating and hoping that it just got better.
Jay Cosgrove: Yep.
Rob Hall: And so part of it’s a tactical problem.
Jay Cosgrove: Yeah.
Rob Hall: It’s how fast do I need to move? How mission critical? Are these things that I’m trying to accomplish?
Jay Cosgrove: Yeah.
Rob Hall: For us, we’ve employed contractors before, for certain tasks that we know have a limited shelf life or things that need to be done very quickly. That don’t justify bringing in a new full time employee. I think that’s a very common reason for that. I mean, we’ve even had just administrative people hired on a contract basis before.
Jay Cosgrove: I think there is a little bit of a difference between bringing on contractors and staff aug as a model, you know, okay. And that’s what I’m trying to get at here is, if you’re an agency, and you’re, you’re listening to this, and considering, you know, some sort of an agreement where the client is specifically asking for a staff, staff aug situation is what are the pros and cons to that? What am I going to get? or What am I going to lose by potentially doing it? And for us, how we define that is really, if the client is willing to pay for a pm being on board or not.
Rob Hall: Right.
Jay Cosgrove: Isn’t that funny?
Rob Hall: Yeah. No, it is funny. But it’s true.
Jay Cosgrove: But literally, we will not staff a project, because we’ve drawn a line to stand on staff. org, we won’t staff a project without pm.
Rob Hall: Right.
Jay Cosgrove: And that’s pretty much where we say is like the pm is really supposed to own the vision, and, you know, have the culture of the team in the process, the team encapsulated in that person.
Rob Hall: That’s right.
Jay Cosgrove: And if they’re not there, then it turns quickly into staff aug, cause someone else is managing our team.
Rob Hall: So let’s try to put this in context for a product owner, or VP of product or a Chief Product officer at a software company who’s trying to drive innovation is having a hard time keeping their team aligned, maybe struggling with velocity needs a team to deliver what what in your view, Jay is the better choice, is it? Let me find a contracting firm that can get me more people just going to throw more bodies at the problem?
Jay Cosgrove: Right.
Rob Hall: Or do I want a team with a process a team with well rounded capabilities that can come in, tackle a problem and grind it to a pulp and deliver something?
Jay Cosgrove: Yeah.
Rob Hall: What makes more sense?
Jay Cosgrove: Well, it’s probably obvious that I’m gonna say, not the staff aug version of it.
Rob Hall: I didn’t really set that up like it was, you know?
Jay Cosgrove: Yeah. Hard decision there.
Rob Hall: Gee let me think.
Jay Cosgrove: Yeah. But I will preface it. Because if I was in some sort of startup situation, and I was considering it, the only time I’d probably consider more of a staff aug model is if I trusted almost with my life, that agency that had and probably knew the developers and had designers and had worked with them personally, that would be the only time that I would truly consider it. The the majority of the time, I would say no, and this is what we sell day in and day out when we talk to people is that when you’re bringing on us, you’re you’re bringing on not just developers and designers and individuals, but you’re bringing on a process in a culture, and a group of team members that know how to work together and know how to get things done professionally. And that is hard to find. I mean, the more that you grow as a pm and in the software industry, in general, you’re gonna realize things like culture, communication, professionalism, are actually really, really, really hard to have, especially within a team.
Rob Hall: You absolutely are.
Jay Cosgrove: Yeah. you might have –
Rob Hall: Well they have they take so much time to build and develop.
Jay Cosgrove: So much time.
Rob Hall: Yeah.
Jay Cosgrove: And you might have them on the individual, you might have a couple really good individuals and that stuff aug company that that are that way, but do you have the cohesion, especially if you’re mixing them in with your team? And that’s the thing is like when you hire DS, you’re getting a team that is so used to working together.
Rob Hall: Yep.
Jay Cosgrove: So used to leaning into each other into their strengths and knowing their weaknesses. And just being aware of that and working very quickly. We work very quickly on on a lot of our projects, especially MVPs.
Rob Hall: See now you’re getting kind of salesy.
Jay Cosgrove: I am getting a little salesy, but you’re getting you’re getting someone that is able to do that. And so if I was in that seat, it would depend on the face of the project, and the staff aug company, but if I was on the seat of a SAS pm or Chief Product officer, something like that, those would be the things I’m considering. Just like you using your example, do I have the infrastructure inside of my company like a pm that it can be a boss and just run this team, build the culture very quickly, lay out the rules have a dev team on my side that’s able to translate our, you know, guidance our level, do I have that and if not, then I’m bringing on a team that that is used to doing that already.
Rob Hall: Sure. that’s fair, that’s fair. So three things to consider.
Rob Hall: If you are a product leader, and you’re trying to make a decision between hiring a team with a defined process for employing more people at potentially great cost, and substantial onboarding time, or going for the staff aig model. Consider the value number one. Consider the value of hiring a team with a process and a method and a culture. You think about the importance of team discipline, team cohesion, think about how hard it is in your own organization to create that, yeah, and know that it doesn’t come out of a vacuum.
Jay Cosgrove: Definitely.
Rob Hall: Second, focus on the outcomes, not just the features that you need help. Think about how the team that you’re hiring, can focus on delivering against those outcomes.
Jay Cosgrove: Yeah.
Rob Hall: And then in terms of cost, orient your cost expectations toward the value that the team is delivering.
Jay Cosgrove: Even if you don’t right now, that’s ultimately what you want your dollars going towards right is value.
Rob Hall: That’s right.
Jay Cosgrove: And we get so in our spreadsheets, and looking at hourly rates, and all that kind of stuff that we lose sight of that value so quickly. But it is really what we’re all striving towards. I’ll give a couple points. If you’re an agency, and you’re considering offering staff aug, some things you want to consider are your company culture and how intact that can be. You obviously have to make the hard decision between revenue for your company.
Rob Hall: Sure.
Jay Cosgrove: In especially right now, you know, not everyone is as blessed as DS has been over the you know, since February. But that is a very real thing. Sometimes you just have to do staff work to keep the lights on.
Rob Hall: For Sure. But if you value your company culture, you have to be discerning about how it could affect it.
Jay Cosgrove: Yeah. And I would really question. Question what you want to do and want to be as an overall agency, do you want to be a thought leader? Do you want to derive value? Or do you really just want to employ developers and designers that get things done? And it’s not necessarily wrong if you answered on the ladder side of it.
Rob Hall: Sure.
Jay Cosgrove: But it’s just being very clear about that up front, I think is important. It’s important for you when you sell and it’s also important for your team to know when they’re coming on of what you’re going to sell the type of work that you’re going to bring in for them.
Rob Hall: Thank you for listening to the experience lab from Digital scientists. To learn more about our team and the great work we do or even hire us visit our website at Digital scientists.com
Rob Hall: Jay it appears that there’s a tropical storm and coming are you ready?
Jay Cosgrove: Ready or not? Here it is.
Rob Hall: Okay, but do you have a taster’s choice in your cup?
Jay Cosgrove: I do not.
Rob Hall: Okay, good. That’s disgusting.
Jay Cosgrove: We here in beautiful Alpharetta have the luxury of having Avalor coffee, which will change your world.
Rob Hall: Yeah, Valor coffee the, yeah, those folks are really great.
Jay Cosgrove: I text one of my friends this morning after I got a cup and I said every time I have a cup of coffee, I question all my other coffee choices in life. Like why even do it?
Rob Hall: To be fair, where I live up in Jasper, we have some good coffee houses. And interesting.
Jay Cosgrove: I wouldn’t call that.
Rob Hall: Yeah, it’s Well, a lot of them are relatively new, which has been nice. Because Valor was definitely my go to for quite a while.
Jay Cosgrove: Yeah. And then the pandemic.
Rob Hall: Yeah, exactly. Exactly. And I’ve missed them.
Jay Cosgrove: Yes.
Rob Hall: So rare that I’m down here now.
Jay Cosgrove: Yes.
Rob Hall: To get to enjoy their delicious hot coffee.
Jay Cosgrove: And anyone driving through Alpharetta. It’s a strong recommendation.
Rob Hall: Yes.
Jay Cosgrove: Really I mean, you just won’t be disappointed by the staff or the actual product. It’s amazing.
Rob Hall: It’s superior. And to be clear, they’re not sponsoring this podcast.
Jay Cosgrove: No, no. I mean, I’ll take a sponsor, but I don’t. They’re definitely not.
Rob Hall: Yeah, we just love them.
Rob Hall: This is the experience lab, the official podcast of digital scientists from Atlanta, Georgia. We’re an experience lab that explores and builds digital products. My name is Rob Hall, and I’m the Senior Director of Product at DS.
Jay Cosgrove: And I’m Jay Cosgrove, senior product manager.
Rob Hall: Thanks for listening.
Rob Hall: So today, we’re having a discussion about staff augmentation. We want to talk about what that phrase actually means because it carries with it a number of interesting connotations. So let’s take just a quick second, before we dive in and define clearly what staff augmentation means. And I think the definition that we might agree on, is just the act of taking your team and making it larger.
Jay Cosgrove: Yep.
Rob Hall: Faster than what it takes to typically hire new employees with less overhead risk.
Jay Cosgrove: Yep.
Rob Hall: So I’m going to utilize typically a staffing agency of some form. And I’m going to request 10 developers or three designers or 10 product managers, whatever it is, based on the volume, and based on an hourly rate.
Jay Cosgrove: Yep.
Rob Hall: So I’ll have a contract that may have an overall kind of target number of how many hours are being contracted per month, and a headcount.
Jay Cosgrove: Exactly.
Rob Hall: If I’m a Product Owner, for example, let’s take, what’s a good example that we can use and not get in trouble with?
Rob Hall: So okay, let’s just say I’m a SaaS company, right? I’ve built a team, I’ve built a product from the ground up, and we’re generating millions of dollars in revenue each year, why in the world? Would I want to take some portion of my product and have a team of people that I don’t even know, potentially overseas, or here stateside, but are not actually my employees? Why would I want them to come on board my team and a contractor type relationship, not as an employee to contribute to, to the product that I’m trying to build.
Jay Cosgrove: I think the most common answer to this is increase in velocity. So if you’re, if you’re successful in the description you just gave with your product, and you’re wanting to add more features. And it takes a while to hire, and it takes a while to train. And if you already have an existing relationship with a staff aug agency, then it’s probably a lot easier to strike up a contract with them, and get the headcount that you need to build the feature that you need.
Rob Hall: So scaling staff?
Jay Cosgrove: Yes scaling staff, I think, the nature of staff augmentation, and how I would probably define it, is that you’re hiring a team to do what you say, and not really do a ton of thinking on their own. And it’s not to say that every relationship is that way. There’s certainly lots of good healthy staff augmentation models that are more contract terms than they are actual in relationship of how they relate to one another. But at the end of the day, you’re hiring headcount and you’re not really hiring someone to do a project, even though it might be for a project. You’re hiring them to really do what you say and you’re going to manage them.
Rob Hall: You talk about it being difficult to hire new employees.
Jay Cosgrove: Right.
Rob Hall: Right. So if you think about the difference between an employee your traditional employee relationship versus a contractor relationship, there’s a greater degree of commitment to an employee.
Jay Cosgrove: Exactly.
Rob Hall: Then there is a contractor.
Jay Cosgrove: Potentially more cost to.
Rob Hall: Sure. Absolutely. There’s more costs, particularly with taxation and health benefits and things like that.
Jay Cosgrove: Yeah, definitely.
Rob Hall: You mentioned velocity. And that’s something we’ve experienced before a digital scientists were even even the work we were doing, being an agency that’s typically in a work for hire relationship, where our clients decided to take work they were sending to us and send it to a staff augmentation group, under the guise of getting to move faster. What do we actually experienced with that? Does the intended result happen?
Jay Cosgrove: It really depends on the project, I think, but most of the time, and this is the reason staff kind of gets a bad name for itself. It’s not going to turn out super well, for I would say mainly for the agency. And it really depends on how the agency is set up, though.
Rob Hall: You’re referring to the staff augmentation agency?
Jay Cosgrove: Exactly, yeah. And so and this kind of goes into our next point here a little bit, but agencies will have a variety of models that they sell, you know, so we can do a full project, we can do all the thought work, we can do just the dev work, we can do the design work, there might be different deliverables or, or services or approaches that they take whatever you want to call it. And when you go to the place of hiring out your staff, then that really is when it turns into staff fog. And at that point, you’re pretty much giving your team members to someone else to manage in a very highly integrated way into their culture, their platform, their project, and leaving kind of the thought work or any personal ownership out of it. So the pluses of this, I would say is that in that project, you’re going to get a lot more integration, potentially, because they’re almost treated like employees for the client. But, but that comes at a cost.
Rob Hall: The cost being hiring a team with an opinion.
Jay Cosgrove: Exactly.
Rob Hall: Right. So if you’re, you’re looking for, it’s a terrible analogy, but in some ways, it’s like hiring factory workers.
Jay Cosgrove: Yeah.
Rob Hall: And not that there’s anything wrong with a factory worker,
Jay Cosgrove: Exactly.
Jay Cosgrove: Yep. Exactly.
Rob Hall: Serve differently, they serve a very important function. But the expectation is that they’re doers, that they’re doing a fairly prescriptive set of tasks. And there’s a high degree of expectation around just volume of production. In this case, you’re expected as a contract developer to come into a team and generate code.
Rob Hall: And, and not really provide a whole lot of constructive feedback, yeah, or lasting value beyond the execution of that particular task.
Jay Cosgrove: Yeah, you’re not the plus for the agency here. And I’m probably going to seesaw between like pluses and minuses. The plus here is that there’s little risk for the actual outcome of the project on the individual contractor or staff auged member, right? Because that risk is going on the pm and the internal team, mostly, in my experience, because you’re really just being brought in as a team member. So as long as you do the work assigned to you, that’s all you have to think about. The actual outcome, does this feature, do what it needs to do? does it serve the customer in the way that it needs to serve? Not only are you usually not even asked that question, but you are generally not held accountable for it, which is good and bad. I mean, like you’re pushing the risk on to the internal team. But also the negative of that is that you have really good ideas as an individual. And at Digital Scientists, and I’m sure so many other agencies across the world, we hired problem solvers. And we want our team to think critically and always be involved and have a voice. And in staff aug, that’s not always the case.
Jay Cosgrove: What would you consider another minus here?
Jay Cosgrove: In my experience dealing with this issue of stuff, talk, I, there’s a couple of different scenarios. And part of it is what you’re talking about in terms of expectation programs. I and that’s not to say that there aren’t an incredible quantity of very talented people that work for staff aug agencies, right. And there’s several in town here in Atlanta that I have a lot of talented people working for them.
Jay Cosgrove: Yeah. And we work with them on other projects.
Rob Hall: Oh, yeah, for sure.
Jay Cosgrove: It’s awesome.
Rob Hall: And not just as developers, like I’ve worked with a lot of project managers and product managers over the years who were contractors through an agency. And a lot of them were just very intelligent, hardworking people. The problem I see is this is you’re not finding a real partnership that has a sense of ownership over the outcome of the product and typically you’re, you’re dealing with an agency that’s billing your organization by the hour.
Jay Cosgrove: Yep.
Rob Hall: So it’s $80 an hour.
Jay Cosgrove: Yeah.
Rob Hall: $95 an hour, whatever it is.
Jay Cosgrove: Yeah. For those that remember our contract discussion, this would be more than likely going to be a time and materials contract.
Rob Hall: That’s right.
Jay Cosgrove: Yeah.
Rob Hall: And so also harkening back to our OKR conversation, and, and looking at the desired performance outcomes for the organization. If you’re an employee, or even an entire team that’s in a staff fog situation, that’s billing by the hour. That’s really your only metric.
Jay Cosgrove: Exactly.
Rob Hall: Is am I fulfilling these tasks over in a certain amount of time?
Jay Cosgrove: Yeah. Are your hours in?
Rob Hall: Exactly. And so there’s, there’s no, there’s no real consequences other than the contract coming to an end.
Jay Cosgrove: Yep.
Rob Hall: There’s not but there’s also no no additional upside either.
Jay Cosgrove: Yeah, right, not really.
Rob Hall: So you as a contractor, or as a contracted team could perform really good work, and help drive those outcomes. But you don’t stand to gain any of the upside either.
Jay Cosgrove: Yeah. And we talked about this in the time materials contract episode, is when you perform really well you find efficiencies, you find ways to outperform your estimates, you’re actually hurting your own company, because you’re billing less hours potentially for that. And again, this all comes down to how it’s scoped. You know, you may have a project where you’re guaranteed 40 hours, whether you have 40 hours worth of work or not, at that point, it’s probably more of a retainer. But still, you might have some kind of weird hybrid contract. But like Rob, saying, there’s a lot of the time just not a lot of upside to it.
Rob Hall: Upsides an interesting thing, right? So get can the owner of a staff augmentation agency generate a great degree of profit –
Jay Cosgrove: Yes.
Rob Hall: As the owner of the company, yes, absolutely.
Jay Cosgrove: Yeah. But you’re selling labor, you’re selling labor.
Rob Hall: Right, you’re not necessarily selling vaught work?
Jay Cosgrove: Yep.
Rob Hall: You’re not necessarily selling strategy.
Jay Cosgrove: Yep.
Rob Hall: And just selling people by the hour.
Jay Cosgrove: And you’re potentially hurting culture, a big thing I’ve seen is team morale. So when you have a team, and as a PM, you you’re very aware of this, because it’s part of your job, the morale of the team is a really big deal, right, and you got to keep spirits up, especially when projects are really tough, or timelines are really tough. And when your staff auging your team, that is totally out of your control. And the day to day work, culture is mostly dictated by your client. So again, you could have a situation where you have a great client, and it works perfectly. But that’s generally the minority of times because if a client is asking asking for staff org, what they’re pretty much saying is, let me do the thinking for you. And just give me your your dev team and or your design team, and to do the work that I dictate. And that just in a statement by itself, like Rob saying, kind of reeks of not being much of a partnership. And really just more of a, you know, I’m not ready to hire employees yet. And you guys are more or less expendable, but we’ll use you for the time being.
Rob Hall: What are some concrete examples of where it does make sense to hire a team in this traditional staff augmentation model, where where the request is not I have this problem that I’m trying to solve, but rather, I need 10 developers?
Jay Cosgrove: I mean, if you’re part of a big SAS, or like you said, and you’re the PM, then Honestly, this could be you looking for stuff aug. And in that case, if you’ve got a good culture, and you’re aware of all these things that we’re saying, for the staff, on the other end, they might be hiring. I think that makes sense. You’re, it’s back to velocity. Really, it’s like you’re wanting to improve it you’re wanting to bring on the team. And maybe there’s a glimmer of hope on the other side of like, well, this works really well, you know, we could bring on some of the staff full time, or we could acquire the company. You know, there’s a lot of options of how this stuff goes. But the main point is, you’re bringing on team members quickly, that are generally highly skilled and have some sort of guarantee from the agency that you’re hiring them from, that they’re going to perform in a certain way. And then it’s also expendable based on the terms of the contract. I think a good question after that, too, is what is the plusses potential pluses for an agency selling staff aug? Because sometimes you’re kind of forced in into a corner to do it, honestly.
Rob Hall: Yeah. So we’ve, it’s interesting, we’ve been on kind of both sides of this debate before. I can think of one case where our team was hired by a client to really focus on on driving value, right, not just completing a set of tasks, but but to create certain outcomes for a startup that we were doing work with. And the company at some point had had come to the conclusion that they could get more done faster and for less money, if they just hired a big group of developers overseas, and offshore all of the work well, six months later and several hundred thousand dollars And zero delivery, they came back to us and said, We need help. We’re in serious trouble.
Jay Cosgrove: There’s the accountability thing, right?
Rob Hall: That’s that accountability thing.
Jay Cosgrove: Yeah.
Rob Hall: But it’s also processing methodology. And so yeah, you can throw 50 developers at a problem.
Jay Cosgrove: Yeah.
Rob Hall: And hope that something comes out the other side. But without good process, good methodology and good culture, you’re gonna have a harder time accomplishing great work. And so given more runway, could that team have delivered eventually? Yes, they would have, but they didn’t have an endless amount of of resource to continue spending and continue iterating and hoping that it just got better.
Jay Cosgrove: Yep.
Rob Hall: And so part of it’s a tactical problem.
Jay Cosgrove: Yeah.
Rob Hall: It’s how fast do I need to move? How mission critical? Are these things that I’m trying to accomplish?
Jay Cosgrove: Yeah.
Rob Hall: For us, we’ve employed contractors before, for certain tasks that we know have a limited shelf life or things that need to be done very quickly. That don’t justify bringing in a new full time employee. I think that’s a very common reason for that. I mean, we’ve even had just administrative people hired on a contract basis before.
Jay Cosgrove: I think there is a little bit of a difference between bringing on contractors and staff aug as a model, you know, okay. And that’s what I’m trying to get at here is, if you’re an agency, and you’re, you’re listening to this, and considering, you know, some sort of an agreement where the client is specifically asking for a staff, staff aug situation is what are the pros and cons to that? What am I going to get? or What am I going to lose by potentially doing it? And for us, how we define that is really, if the client is willing to pay for a pm being on board or not.
Rob Hall: Right.
Jay Cosgrove: Isn’t that funny?
Rob Hall: Yeah. No, it is funny. But it’s true.
Jay Cosgrove: But literally, we will not staff a project, because we’ve drawn a line to stand on staff. org, we won’t staff a project without pm.
Rob Hall: Right.
Jay Cosgrove: And that’s pretty much where we say is like the pm is really supposed to own the vision, and, you know, have the culture of the team in the process, the team encapsulated in that person.
Rob Hall: That’s right.
Jay Cosgrove: And if they’re not there, then it turns quickly into staff aug, cause someone else is managing our team.
Rob Hall: So let’s try to put this in context for a product owner, or VP of product or a Chief Product officer at a software company who’s trying to drive innovation is having a hard time keeping their team aligned, maybe struggling with velocity needs a team to deliver what what in your view, Jay is the better choice, is it? Let me find a contracting firm that can get me more people just going to throw more bodies at the problem?
Jay Cosgrove: Right.
Rob Hall: Or do I want a team with a process a team with well rounded capabilities that can come in, tackle a problem and grind it to a pulp and deliver something?
Jay Cosgrove: Yeah.
Rob Hall: What makes more sense?
Jay Cosgrove: Well, it’s probably obvious that I’m gonna say, not the staff aug version of it.
Rob Hall: I didn’t really set that up like it was, you know?
Jay Cosgrove: Yeah. Hard decision there.
Rob Hall: Gee let me think.
Jay Cosgrove: Yeah. But I will preface it. Because if I was in some sort of startup situation, and I was considering it, the only time I’d probably consider more of a staff aug model is if I trusted almost with my life, that agency that had and probably knew the developers and had designers and had worked with them personally, that would be the only time that I would truly consider it. The the majority of the time, I would say no, and this is what we sell day in and day out when we talk to people is that when you’re bringing on us, you’re you’re bringing on not just developers and designers and individuals, but you’re bringing on a process in a culture, and a group of team members that know how to work together and know how to get things done professionally. And that is hard to find. I mean, the more that you grow as a pm and in the software industry, in general, you’re gonna realize things like culture, communication, professionalism, are actually really, really, really hard to have, especially within a team.
Rob Hall: You absolutely are.
Jay Cosgrove: Yeah. you might have –
Rob Hall: Well they have they take so much time to build and develop.
Jay Cosgrove: So much time.
Rob Hall: Yeah.
Jay Cosgrove: And you might have them on the individual, you might have a couple really good individuals and that stuff aug company that that are that way, but do you have the cohesion, especially if you’re mixing them in with your team? And that’s the thing is like when you hire DS, you’re getting a team that is so used to working together.
Rob Hall: Yep.
Jay Cosgrove: So used to leaning into each other into their strengths and knowing their weaknesses. And just being aware of that and working very quickly. We work very quickly on on a lot of our projects, especially MVPs.
Rob Hall: See now you’re getting kind of salesy.
Jay Cosgrove: I am getting a little salesy, but you’re getting you’re getting someone that is able to do that. And so if I was in that seat, it would depend on the face of the project, and the staff aug company, but if I was on the seat of a SAS pm or Chief Product officer, something like that, those would be the things I’m considering. Just like you using your example, do I have the infrastructure inside of my company like a pm that it can be a boss and just run this team, build the culture very quickly, lay out the rules have a dev team on my side that’s able to translate our, you know, guidance our level, do I have that and if not, then I’m bringing on a team that that is used to doing that already.
Rob Hall: Sure. that’s fair, that’s fair. So three things to consider.
Rob Hall: If you are a product leader, and you’re trying to make a decision between hiring a team with a defined process for employing more people at potentially great cost, and substantial onboarding time, or going for the staff aig model. Consider the value number one. Consider the value of hiring a team with a process and a method and a culture. You think about the importance of team discipline, team cohesion, think about how hard it is in your own organization to create that, yeah, and know that it doesn’t come out of a vacuum.
Jay Cosgrove: Definitely.
Rob Hall: Second, focus on the outcomes, not just the features that you need help. Think about how the team that you’re hiring, can focus on delivering against those outcomes.
Jay Cosgrove: Yeah.
Rob Hall: And then in terms of cost, orient your cost expectations toward the value that the team is delivering.
Jay Cosgrove: Even if you don’t right now, that’s ultimately what you want your dollars going towards right is value.
Rob Hall: That’s right.
Jay Cosgrove: And we get so in our spreadsheets, and looking at hourly rates, and all that kind of stuff that we lose sight of that value so quickly. But it is really what we’re all striving towards. I’ll give a couple points. If you’re an agency, and you’re considering offering staff aug, some things you want to consider are your company culture and how intact that can be. You obviously have to make the hard decision between revenue for your company.
Rob Hall: Sure.
Jay Cosgrove: In especially right now, you know, not everyone is as blessed as DS has been over the you know, since February. But that is a very real thing. Sometimes you just have to do staff work to keep the lights on.
Rob Hall: For Sure. But if you value your company culture, you have to be discerning about how it could affect it.
Jay Cosgrove: Yeah. And I would really question. Question what you want to do and want to be as an overall agency, do you want to be a thought leader? Do you want to derive value? Or do you really just want to employ developers and designers that get things done? And it’s not necessarily wrong if you answered on the ladder side of it.
Rob Hall: Sure.
Jay Cosgrove: But it’s just being very clear about that up front, I think is important. It’s important for you when you sell and it’s also important for your team to know when they’re coming on of what you’re going to sell the type of work that you’re going to bring in for them.
Rob Hall: Thank you for listening to the experience lab from Digital scientists. To learn more about our team and the great work we do or even hire us visit our website at Digital scientists.com
