Augmented Staff vs. Permanent Staffing: A Cost-Benefit Breakdown

When it comes to scaling a team, every business has to make a decision between augmented staff vs permanent employees. While both options can fill the IT skill gap, their financial impact is different.

This blog will help you with a detailed comparison of staff augmentation vs permanent staffing. We’ll break down the salary considerations, hidden expenses, and long-term financial impacts that might help you with informed decision-making.

So, let’s get started.

Augmented Staff vs Permanent Staffing: Cost-Benefit Ratio

1. Upfront Hiring Costs

These are the immediate costs an organization needs to manage at the beginning of the hiring process. These costs include candidate sourcing, interviews,  and onboarding.

Recruitment and Sourcing Cost

Permanent staffing 

The hiring process for full time employees begins with a job board posting on hiring platforms like LinkedIn, ZipRecruiter, Indeed, Google for jobs, and more. Some of these platforms ask for a certain fee to post job requirements. For example, ZipRecruiter has three different pricing plans — standard, premium, and pro. These pricing plans start from $399 per job per month and go as high as $899 per job per month. 

Beyond this, you might need an Application tracking system like Zoho Recruit, BambooHR, Workable, and more. For example the pricing for the standard plan for Zoho Recruit for corporate HR’s costs $30 per recruiter per month.

Augmented staff

The recruitment and sourcing process for staff augmentation is simple and starts by understanding your requirements and choosing an IT staffing company with relevant experience, and skills to offer. There is no such upfront recruitment and sourcing cost involved in staff augmentation.

Interview Process Cost

Permanent staffing

Multiple people are involved in the full-time staffing and permanent employee hiring process, such as the hiring manager, recruiters, department heads, and more. The average interview process isn’t just time-consuming—it’s expensive. From resume reviews to final-round panels, companies spend 20–30 hours and $1,000–2,000 per hire just on interviewers’ salaries.

Augmented staff

The average interview time for staff augmentation is 3 to 5 hours for the decision-makers. IT staff augmentation companies have pre-vetted talent streamlining the interview process.

On average, the cost per augmented staff is estimated to be $300-500.

Onboarding Cost

Permanent staffing

Beyond the onboarding time of 2-3 weeks, it requires a significant investment in the administrative process for the role-specific benefits enrollment and company-specific training. On average, the onboarding process costs approximately $300-500 per employee.

Augmented staff

The onboarding time for augmented staff is approximately 1-2 days which requires no benefits, enrollments, and minimum HR processing. They can start working on the project immediately after the introduction to company culture, project specifics, and necessary tools.

2. Base Salary Analysis

Permanent staffing

Permanent staff often work on a fixed annual or monthly payment. For example, the average salary of a Salesforce developer in the USA is $83,524 annually. Their base salary is predictable and fixed irrespective of the workload variations. 

Beyond base salary, permanent staff are also entitled to several other benefits from employers like health insurance, gratuity, payroll taxes, paid leaves, annual salary appraisals, and performance bonuses. According to the U.S. Department of Labor, employers spend an average of $44.40 per hour on each employee. This total breaks down into $31.25 per hour in wages and $13.15 per hour in benefits, with benefits making up 29.6% of the overall compensation.

Augmented staff

Augmented staff often works on time and material, or fixed price compensations. For example, the average pricing of staff augmentation in the USA is $50-100 per hour. With no added benefits beyond the hourly rate like insurance, taxes, paid leaves, and more, employers pay only for the hours worked. 

3. Operational Expenses 

Permanent staffing

The very first imperative when working with a permanent employee is a dedicated workspace. For example, the average workspace rent in the USA starts from $25 to $60 per square foot annually. A 1,000-square-foot office space in the USA would cost approximately $25,000 to $60,000 annually. Beyond the rent expenses, the organization also has to manage utilities, maintenance, and other necessities. 

Beyond workspace, an organization is also obliged to provide employees with hardware, software, and other necessities to perform their day-to-day jobs. 

Augmented staff

Augmented staff often works remotely, so there is no need for a workspace. Whether you opt for an onshore, nearshore, or offshore staffing model, the infrastructure requirement will be managed by the staffing firm. Further, the augmented staff also manages hardware, and software requirements, and charges only for resources utilized. 

4. Long-term Financial Commitment

Permanent staffing

Hiring permanent employees requires a significant upfront cost, therefore scaling the team up and down would be costly, requiring significant upfront, and ongoing investment. 

Beyond cost, scaling a team is a lengthy process often taking around 1-3 months to hire, and ensuring the team reaches the desired level of productivity. 

Scaling down or layoffs of permanent employees requires severance pay, unemployment benefits, and legal issues. For example, Meta Platforms—the parent company of Facebook, Instagram, and WhatsApp—laid off 11,000 full-time positions in 2022, resulting in roughly $975 million in severance pay, which averages out to about $88,000 per employee.

Augmented staff

Augmented staff benefits the business with the flexibility to scale the team up and down with no to minimal additional costs beyond the hourly or fixed price. The augmentation contracts can be easily terminated without paying the severance and other unemployment benefits. 

Augmented Staff vs Permanent Staffing: Which One to Consider?

Put simply, the right choice is subject to your organizational priorities, financial structure, and long-term plans. Careful analysis of the cost factors outlined above will help you to make an informed decision to meet financial requirements and deliver long-term benefits.  

Many businesses opt for the combination of these two models to maintain the continuity of their core operations with permanent staffing while benefiting from augmented staff for fluctuating workloads, and specialized skills.