Staff Augmentation Services in the USA: Save Up to 75% on Staff Augmentation

IT Staff Augmentation Services in the USA: An Overview

IT staff augmentation is a business strategy for temporarily hiring external tech professionals to supplement your teams. The model is widely used across industries in the USA, especially in sectors like technology, finance, healthcare, and manufacturing, where the need for specialized IT skills can fluctuate.

We've covered the ins and outs of staff augmentation elsewhere, so here's just a quick summary of the benefits:

• Flexibility: Augmentation lets you quickly fill skill gaps and add IT professionals to your teams when needed to get your product to market faster.
• Talent: Staff augmentation gives you access to a global pool of specialized IT talent, particularly useful for complex or niche projects.
• Cost-effectiveness: You only pay for the skills you need when you need them.
• Scalability: Scale your teams up or down according to project demands.
• Management: You directly manage and oversee the work of augmented team members, making integration easier.
• Administration: Your service provider handles recruitment, onboarding, and paperwork, reducing your administrative burden.

A reputable and experienced IT staff augmentation services provider can bring you all these benefits and ensure seamless integration of augmented staff into your team and processes.

Market Analysis of Salaries and Contractor Rates in the USA

The increasing demand for digital transformation, cloud computing, cybersecurity, and AI-based solutions has driven the growth of the US IT job market. The shift towards remote and hybrid work models has fueled demand even further. This demand is reflected in rates demanded by staff augmentation companies in the USA.

IT salaries by US state

Since the cost of living, taxes, and local demand for talent most influence salary rates, US salaries vary from state to state. Tech hubs also tend to offer salaries 20-30% above the national average, pushing up compensation in California and Washington.

Here’s a rough idea of what IT employees can expect to earn across the US.

IT contractor rates vs. full-time employee salaries

Hiring contractors gets you flexibility and niche skills without commitment, but you pay more for the convenience. Contractors can charge nearly 130% more than what a full-time employee would earn for similar work to compensate for overheads and the absence of job security.

For example, a software developer contractor's hourly rate might work out as $145,000 to $312,000 a year, depending on their location, expertise, and demand. At the same time, a full-time software developer's salary might range from $90,000 to $150,000 a year but include insurance, paid leave, and consistent working hours.

Let's look at how this works for different positions, assuming that there are 2080 work hours in one year.

Trends in IT compensation

2023 was a year of big shifts for tech professionals. After the pandemic boosted demand for cloud services, companies started cutting back on spending as recession fears grew. This led to major FAANG layoffs early in the year. Despite this, the tech job market stayed resilient, maintaining a steady demand for skilled professionals.

The 2024 Dice Tech Salary Report shows that

• Tech salary growth has slowed. This started between 2022 and 2023, and early-career professionals (less than five years of experience) have been affected the most.
• Compensation dissatisfaction is on the rise. Only 49% of tech professionals are satisfied with their compensation, a drop from 55% in 2022.
• Alternative benefits are becoming more attractive. Companies increasingly offer alternative perks like stock options, remote work stipends, and wellness programs.
• AI and data analytics positions are seeing fast-growing salaries. Companies are willing to pay more for expertise in these areas, especially for roles that support innovative initiatives.

We’re also seeing the impact of remote work on tech salaries as companies adjust compensation based on geographic location. Tech workers in lower-cost regions may see salaries slightly lower than their counterparts in high-cost areas like Silicon Valley.

More tech professionals are also opting for contracting roles, where they can often earn more than full-time employees. This trend is particularly strong among senior-level professionals and those with niche expertise.

Client reviews

Don’t just look at the number of reviews and average rating; sit down and read them. They can provide invaluable insights into a provider’s approach, values, and communication style. Use this information to choose a company you’ll be comfortable working with.

Outside these points, you'll need to consider your business plan and needs: whether you’re looking for onshore, nearshore, or remote cooperation and how you want to be charged. Here are the main options:

Employee Salary Comparison: USA vs. Eastern & Central Europe

Now you have an idea of the salaries charged by IT staff augmentation companies in the USA, let’s see what you can expect if you augment from Eastern and Central Europe.

Team extension with employees in Eastern & Central Europe vs. onshore US employees

The average gross salary for IT professionals in the USA is significantly higher than in Eastern and Central Europe. For example, a mid-level software engineer in the USA might earn between $100,000 and $140,000 a year; a similar mid-level software engineer in Poland or Ukraine could earn $30,000 to $50,000 yearly.

However, employers in the US must pay Social Security, Medicare, and federal and state unemployment taxes, plus health insurance and other benefits. Here’s an approximate breakdown for a mid-level software engineer with a gross salary of $120,000:

• Social Security tax — 6.2%
• Medicare tax — 1.45%
• Federal unemployment tax — 6% on the first $7,000 of each employee’s wages
• State unemployment insurance — around 1-2% on average, depending on the state
• Workers' compensation insurance — around $0.30 per $100 of payroll
• Health insurance — around $7,911 (2023 data)
• Retirement contributions (401(k) match) — typically 3% of gross salary

And here’s what you get when you sum it up:

Therefore, in addition to the gross salary of around $120,000 for a middle software engineer in the US, the employer will pay $21,393, which amounts to $141,393 annually.

Now, let's look at the numbers for team augmentation in Central and Eastern Europe. Each country requires employers to pay additional payments to their employees. However, the client doesn't pay these additional charges since the team augmentation vendors are the employers. The augmented team provider covers all social security contributions (pension, disability, accident, etc.) and health or work insurance.

Extending your team with a middle software engineer from Central or Eastern Europe will still cost you about $30,000-$50,000 a year, i.e., only the gross salary without additional costs.

To illustrate, if you were hiring ten software engineers, the total annual costs would be around:

• Onshore (USA): $1.19 million-$1.64 million
• Staff augmentation (Eastern & Central Europe): $300,000-$500,000

This shows annual savings of around $890,000-$1.14 million, or 70%-75% if you opt for staff augmentation in Eastern and Central Europe.

Contractor Rates Comparison: USA vs. Eastern & Central Europe

Using IT contractor augmentation services based in the USA will also cost you more than offshore contractors. Here’s the breakdown.

Team extension with contractors in Eastern & Central Europe vs. onshore US employees

Contractor rates vary widely depending on industry, experience level, and location. In the USA, the average IT and software development rate is around $100-$200 per hour.

In Eastern and Central Europe, the price tag is much lower: employees earn, on average, around $20-$46 per hour. Even for highly specialized skills, rates are still considerably lower, often peaking at around $100 per hour for top-tier experts.

Eastern and Central European countries also often have more streamlined contractor agreements with fewer legal and compliance hurdles, leading to lower overall costs. Some countries even offer favorable tax regimes for contractors.

And since these contractors typically work on a project basis with clear deliverables, there are fewer unexpected costs, which makes budgeting more predictable.

To take a similar example as above, hiring a team of ten contractors in the US working at an average rate of $150 per hour, 40 hours a week, would cost you just over $3 million a year.

Hiring the same team in Eastern and Central Europe at an average rate of $30 per hour would cost around $624,000 annually.

This represents cost savings of 80% or about $2.4 million annually.

Augmented Employees vs. Augmented Contractors: Similarities, Differences, and Benefits

There are two hiring options for staff augmentation, and you should be clear about which one you need.

Augmented employees are full-time employees on the supplier company's payroll who are usually integrated into the company’s processes and structure.

Augmented contractors, on the other hand, are external individuals (or firms) hired for a specific period or project. They are not part of the company's regular payroll but work on a contract basis.

The benefits of employees and contractors have some overlap. For example, both augmentation options can help you save on overhead costs, including office space, hardware, and recruitment expenses.

They also both provide quick access to a wide range of skilled professionals, often from global talent pools, so you can scale teams up or down as needed and quickly replace underperforming hires.

That said, the differences between augmented employees and augmented contractors make it worth considering each option carefully before deciding.

• Cost-effectiveness: Though contractors can be more cost-effective for short-term needs, augmented employees are usually better value for longer projects.
• Commitment: Augmented employees will usually get more involved in your longer-term goals and projects, which means they’re more integrated with the team. Augmented contractors, on the other hand, are focused on delivering specific results within a set period without more profound obligations.
• Skills development: You may benefit from offering augmented employees internal training programs. Because their projects are long-term, this kind of skills development can pay off, as augmented employees will have enough time to benefit you. In contrast, investing in contractor development makes less sense since they’ll switch to another client soon.

We can summarize the main differences between augmented employees and contractors like this:

Choosing the Right Staff Augmentation Company in the USA

Finding a good staff augmentation company starts with clearly defining your needs, budget constraints, expertise required, project scope, and timeline. However, you should also be aware of common red flags.

Staff Augmentation Partner Red Flags

Offering contractors instead of employees

While contractors can offer flexibility, they won’t usually be suitable as long-term team members. Some staff augmentation vendors might recommend you hire contractors as a way to cut their costs. Look for a firm that can provide both contractors and employees and give unbiased advice on your best option.

Inconsistent pricing

Inconsistent pricing can indicate a lack of transparency or hidden costs. It might also suggest that the company is not well-organized or overcharges clients. Check that your candidate company has clear, consistent pricing models and detailed breakdowns of costs.

Offering junior-level contractors

Ensure that the company has contractors with the appropriate level of expertise for your needs. To check, ask for detailed profiles and references for the proposed contractors.

Offering unqualified contractors

Even worse than junior-level contractors are contractors who aren’t properly vetted or lack any qualifications for your planned project work. Request previous work samples, check references to avoid this, and verify the company’s vetting process.

Signs of a great outstaffing partner

Not all flags are red! There are also positive signs that an augmentation vendor is a reliable partner interested in helping your business and not just making money.

Great Outstaffing Partner Signs

Cost efficiency

A great outstaffing partner will offer competitive rates without compromising on quality. They’ll be transparent about pricing and help you achieve significant cost savings while providing top-notch services.

Feedback

Positive client feedback on review websites like Clutch or GoodFirms strongly indicates reliability and effectiveness. It reflects a company’s ability to deliver on its promises and meet your expectations.

Portfolio and technology stack

A strong portfolio and a diverse technology stack indicate that the company has a broad range of experience and expertise. Take time to review a partner’s portfolio and assess their tech stack to ensure they can deliver. (You can check out Giraffe’s portfolio here.)

Partnership and trust

A great outstaffing partner will work to build a strong, collaborative relationship with you, fostering trust and mutual respect. This helps align goals and ensure smooth project execution. Look for signs of a proactive approach to problem-solving and a commitment to long-term partnership.

Our Expertise

Giraffe Software is a tech partner for staff augmentation in UX design, mobile development, and Node.js development services. We’re dedicated to cutting IT budgets by a minimum of 35%- 45%. Working with us gives you access to a team of 70+ in-house tech specialists and a pool of 30,000 pre-vetted experts.

Over the last seven years, we’ve delivered 120+ projects for 60+ clients across Europe and the US and earned glowing reviews on Clutch, Upwork, and GoodFirms. Here’s a quick sample of our projects:

looxis, a German company specializing in photo-etched gifts, needed to move their sales online and wanted an eCommerce store with 2D and 3D modeling features.

When their previous vendor didn’t cut, we jumped in and shortlisted eight qualified candidates in three days, so their team was complete within two weeks.

We worked together for five years, helping LOOXIS launch a successful digital store and cut operational costs by over 50%

REM Waste, a UK waste management company, needed a new CRM system to scale its business after its previous developers failed.

We quickly assembled a team of developers, an architect, a PM, and a QA specialist and delivered a high-quality MVP in just four months, helping REM Waste secure additional funding.

They saved 38% compared to local hiring, and they’re now planning a SaaS solution based on their new CRM.