Nearshore Staff Augmentation: Tips, Benefits and Pitfalls

Staff augmentation is a rescue option for companies that need to close talent gaps rapidly but don’t have a reason to hire outsourcing companies to do the whole project. 

In this article, we shall explain why nearshore staff augmentation is a good option for companies seeking the right talent in a rush, what the difference between offshore staff augmentation and nearshoring is, and how to find a proper staff augmentation agency if you are running a business in the Americas. 

Let’s get started! 

What is nearshore staff augmentation? 

Nearshore staff augmentation is hiring a third-party service provider from a nearby country (or area) to temporality supplement the in-house staff. 

Besides being cost-effective, staff augmentation provides other benefits, mainly flexibility. With nearshore staff augmentation, you can quickly close the gap in human resources for the time being of your project without needing to hire a specialist permanently. 

So, a nearshore employee is a temporary part of your team that remains employed by another company. This person or people do not receive payment from your company directly nor sign any contracts with you. 

Staff augmentation representatives can take on any role, even managerial positions, as their main aim is to close the gap in the expertise needed at a given moment. 

Staff augmentation has remained a popular service for the last decade. For example, from 2016 to 2022, it made up 6.3% to 6.5% of managed services delivered worldwide. In the following decade, this number will grow, as the whole managed services market is going to increase from 279 billion U.S. dollars to 500 billion U.S. dollars in 2028

Now, let’s compare the nearshore staff augmentation versus other outsourcing models. 

Nearshore staff augmentation vs. other models

Nearshore staff augmentation differs from other kinds of outsourcing. Here’s how: 

Nearshore vs. offshore vs. onshore staff augmentation

The notions “nearshore” and “offshore” differ from each other in terms of geographical proximity. Onshore staff augmentation is hiring remote workers in your locality (like a company near your city). Nearshore staff augmentation refers to signing a partnership with a vendor from a neighboring party. Offshore staff augmentation is hiring a company from a distant area (like other company). 

Nearshore staff augmentation vs. outsourcing

Nearshore outsourcing is hiring an external team to do a part of your project. The team controls the project and does all the organization, management, and reporting. With nearshore staff augmentation, you hire a vendor who sends one or several specialists to be temporary team members. All the preparation, management, and reporting remain within the scope of your duties. 

Nearshore staff augmentation vs. independent contractor 

With nearshore staff augmentation, you strike a contract with a vendor, not individual employees. In case of issues with the quality of performance, you can expect the vendor to fix the problem on your behalf (assign a more qualified specialist to the task). If you hire an independent contractor, the rate may be more favorable, but in case of disruption, you are the one to close gaps. 

The benefits of nearshore staff augmentation explained

According to Deloitte, 83% of the world’s businesses select different outsourcing options, including staff augmentation for cost reduction. That is one of the main benefits of this model. Other perks include: 

  • On-demand competence: staff augmentation allows you to close a talent gap quickly.
  • Faster time to market: With nearshore staff augmentation, you hire a person to substitute a team member or take over part of a task list that hides production. This avoids disruptions. 
  • Availability upon agreement: You hire a staff augmentation agency only if you need them. 
  • Improved collaboration: Compared with offshore staff augmentation, nearshore vendors often share a similar culture and are located in the same time zone. 

How do we avoid the pitfalls of nearshore staff augmentation?

According to the research published on Science Direct, the most frequent reasons for project failure are: 

  • Allocation of scarce resources
  • The lack of top management’s commitment
  • Disrupted communication chains
  • Wrong team configuration and structure
  • The lack of social cohesion inside the team 

To avoid these and make sure your staff augmentation project will be successful, pay attention to these components: 

Communication: Only 45% of companies globally have implemented effective communication procedures that allow uninterrupted workflow. Ignoring this can hinder project success. 

Reporting: Although reporting is a necessity, only 55% of businesses have reporting and analytics systems in place, and 36% are still planning to improve them. 

Feedback: Regular feedback, especially from top management, helps to avoid changes in requests and unexpected outcomes. In fact, only 40% of mature businesses have strong communication chains with company owners, allowing them to get regular feedback. Others, still avoid direct feedback and reporting, which, in fact, harms productivity. 

How do you find a staff augmentation agency? 

If your business is located in North America, countries like Costa Rica will be the best option for nearshore staff augmentation. With 155 software development companies favorable conditions for business growth, hiring a software agency in Costa Rica for staff augmentation needs will be wise.   

Summing up 

Nearshore staff augmentation is an increasingly popular option since it offers the usual perks of outsourcing (lower costs, access to talent pool, scalability) but helps to avoid the downfalls (cultural differences, communication issues, different time zones). With proper project organization and readiness to be involved in the project, nearshore staff augmentation will help your company close the immediate business needs.