How to Measure ROI of IT Staff Augmentation: Metrics That Matter?

Deploying augmented staff is indeed a strategic choice, but simply onboarding them is not enough. It is essential to measure their performance to ensure you achieve the expected value and improve return on investment (ROI). 

This blog introduces you to key metrics that help you measure the ROI of IT staff augmentation, and by using these metrics effectively, you can unlock the full benefits of IT staff augmentation.

Let’s dive in!

Metrics to Measure and Improve ROI of IT Staff Augmentation

1. Time-to-Productivity 

This metric measures the time it takes for the augmented staff to reach full efficiency and productivity after onboarding. The sooner they become productive, the faster your projects will progress, meeting milestones and final deadlines on time.

How Will You Measure It? 

Plan a structured hiring process divided into distinct stages, including sourcing, contracting, onboarding, documentation, and initial task assignment. Record the time invested at each step. Evaluate the duration taken by augmented staff to achieve specific milestones. This data should be compared with the timeline of your permanent employees to assess efficiency and performance differences.

From this comparison, you get insights on how quickly augmented staff become productive compared to full-time employees. The costs related to long hiring and training cycles are eliminated, idle time decreases and projects can be delivered more quickly, resulting in improved ROI of IT staff augmentation. 

How to Improve? 

Standardize Your Onboarding Process 

• Share information across your workflows, tools, and business systems with new hires. 
• Dedicate a strict timeline and plan each day for a dedicated onboarding activity. Suppose day one is dedicated to system access and tool setup; day two is for project overview and team introductions, and so on.

This planned approach eliminates guesswork, confusion, and delays during onboarding. 

Create Clear and Comprehensive Documentation

• Share up-to-date resources with new hires covering business processes, tools, and business systems. 

• Build a common knowledge hub for similar roles. 
• Design step-by-step guides for onboarding augmented staff for differentiated roles such as developer, administrator, quality analyst, and more.

It helps augmented staff to resolve their queries independently and eliminates reliance on existing teams. 

Set Up Mentorship Programs 

• Structure and schedule these programs daily, focused on differentiated activities each day. 
• Allow access to experienced team members who can answer their queries. 
• Create a role-specific knowledge hub that augmented staff in various roles can use for reference. 

These programs help in speeding up knowledge transfer, which directly accelerates productivity. 

2. Process Optimization Impact 

This metric evaluates the positive improvements in your business operations after adding augmented staff to your team.  

How Will You Measure It? 

Set clear business goals and baselines to help you track your progress. Before augmenting your staff, measure the Key Performance Indicators (KPIs) of your business against your existing workforce.   

After staff augmentation, track the same performance indicators and compare the results in both cases. Notice the difference and any improvement shows a positive impact on the staff augmentation ROI.

How to Improve? 

• Utilize project management tools like Asana, Jira, etc. to assign tasks, set priorities, and monitor real-time staff progress. 
• Time tracking tools can help monitor the time invested in a particular task, revealing inefficient time on repetitive tasks. 
• Automated dashboards such as Power BI and Tableau help collect and visualize data from multiple sources, providing easy-to-understand and useful insights. 

You get quantifiable data on staff output, helping you create and adjust strategies for enhanced productivity.  

3. Internal Resource Optimization 

This metric focuses on utilizing permanent employees more efficiently. 

It evaluates how effectively the permanent staff can focus on high-value tasks that drive growth, while augmented staff handles specialized or routine tasks. 

How Will You Measure It? 

Use project management software or time-tracking tools to analyze the time permanent staff allocates to various tasks. Divide them into operational and strategic tasks, and calculate the time invested in high-value versus low-value activities. Repeat the process after incorporating staff augmentation. 

Notice the difference in time permanent employees dedicate to low-value tasks versus on strategic initiatives.  

How to Improve? 

Regularly audit your workloads to identify task distribution inefficiencies. All tasks are not the same and require specialized expertise, which may be lacking in your core team. Therefore, these tasks can be strategically delegated to augmented staff, efficiently filling IT skill gaps. 

Further, assess the internal team’s bandwidth. Leverage project management tools and time-tracking systems to gain valuable insights on it. If they still fall short, expand the scope of augmented staff to support the core team. 

4. Cost-Saving Calculation 

This metric measures the cost savings you achieved by leveraging augmented staff instead of onboarding full-time employees.  

How Will You Measure It? 

Compare the total cost of hiring full-time employees—including salaries, employee benefits, training, and overhead costs—to the cost of hiring augmented staff considering various pricing models. 

Cost Savings= Full-Time Employees Hiring Cost — Augmented IT Staff Hiring Cost 

This calculation results in a definite number of the cost savings you made. 

How to Improve? 

• Mandate documenting processes and decisions that act as reference material, allowing your teams to refer back to them.    
• Shadow or pair internal teams with augmented staff to speed up knowledge transfer, allowing permanent staff to learn specialized skills for future projects.
• Audit your internal team’s ability to work on specialized tasks. Conduct a post-engagement skill assessment and compare the output and quality of your team to that of the augmented staff. 

It helps in long-term knowledge retention, leading to significant cost savings over time, by ensuring that valuable knowledge from temporary staff is captured and retained within your organization.

5. Resource Elasticity Ratio

The resource elasticity ratio measures how quickly and cost-effectively you can adjust your resources, such as staff, time, and budget, to match changing demand. 

A high elasticity ratio means you can quickly add or downscale more resources as needed, helping you save money during slow periods.

How Will You Measure It? 

Compare the cost of scaling up and down separately with permanent staff and augmented staff:

Scaling Up Cost Comparison

With permanent employees, account for recruitment costs such as background checks, screening, and interviewing. Include onboarding expenses for training, equipment, and administrative costs, along with long-term costs including salaries, employee benefits, and more. 

For staff augmentation, you have to pay as per the pricing model you have opted for, with minimal onboarding costs and no long-term costs. 

Scaling Down Cost Comparison 

When scaling down full-time employees, it accounts for severance pay, legal fees, and rehiring costs. Whereas staff augmentation involves little to no additional cost beyond the final invoice.  

This Staff augmentation vs permanent staffing comparison helps you decide which approach to move forward with while maintaining operational efficiency and financial health.

How to Improve? 

• Use pay-as-you-go staffing models such as time & material model, freelance, outsourcing, and others. Only pay for the hours worked and deliverables completed while ensuring scaling up and down flexibility without recruitment and laying off. 
• Measure the augmented staff’s time utilization during peak and off-peak cycles. Adjust your team size to match the actual workload to avoid paying for idle resources during the off-season and augment additional staff during peak times.
• Structure the staff augmentation agreement as per your business’s seasonality. Include terms and clauses such as the ‘pause clause’, which temporarily suspends services during off-seasons, and others that support scaling flexibility while saving costs on unused resources.   

These strategies help you scale up or down your resources quickly, improving your resource elasticity ratio by aligning your spending with actual demand.

Conclusion 

Measuring the ROI of IT staff augmentation can help you understand whether your investment is paying off. With these insights, you can make decisions that boost project success, overall business efficiency, and cost savings. 

Smart IT Staff takes this a step further by applying smart, agile principles to IT staff augmentation. Our proven approach and pre-vetted professionals ensure that you only pay for the talent you utilize and when you need it, while tracking key performance metrics to maximize staff augmentation ROI. 

We not only provide immediate integration but also ongoing strategic support to optimize your resource allocation, reduce costs, and drive business growth.