IT Staff Augmentation 2021 report: a comprehensive overview

BY Ernesto Spruyt · 3 MIN READ

Until Covid struck, IT staff augmentation was rapidly growing as a major alternative to both software outsourcing and internal hiring of software developers. Therefore, in this report we aim to create a comprehensive overview of the situation post-Covid.

Firstly, we’ll dive into the basics of IT staff augmentation. What is it? Why do so many companies turn to it? And how to do it right?

After that, we’ll dive into market trends. We cover the most voluminous markets for IT staff augmentation: the United States and (western) Europe. How has the tech talent shortage been affected by Covid? What are current market trends? And how does the market situation compare from country to country, and city to city?

Report Overview


  • What is staff augmentation
  • The advantages of IT staff augmentation
  • The disadvantages of IT staff augmentation
  • Staff augmentation vs software outsourcing
  • Staff augmentation vs managed services
  • Selecting the right partner
  • Staff augmentation best practices


  • The tech talent shortage in the United States
  • IT staff augmentation market trends in the US
  • Best cities for tech jobs in 2021


  • The tech talent shortage in European countries
  • Best countries for tech jobs in 2021


Augmenting your team with IT professionals: the basics

Maybe you’re not familiar with the term “staff augmentation” or “augment staffing”. But if you have a team of software engineers in your organization, there is a big chance you’ve already at least considered it…

What is staff augmentation

Staff augmentation is a staffing strategy aimed at flexibly and quickly expanding your team. Through a provider you can add talent to your team on demand. Often the talent works remotely or even in other countries. It can be used to fill short-term and long-term positions.

These new team members are employed by the provider. As a result, the provider manages the recruitment process and carries the legal and administrative burden of hiring the staff. In addition, the provider makes sure the client has continuous and flexible access to the required talent.

Staff augmentation is typically popular in the IT sector. On the one hand because it is often difficult to find qualified staff locally. And on the other hand because software development lends itself very well for remote work.

The advantages of IT staff augmentation

There are several reasons why staff augmentation has become so popular in the IT sector in recent years.

  • Access to talent. Quickly find a fit for hard-to-fill positions within your team.
  • Easy hiring. You can leverage the talent pool and recruitment capacity of the provider.
  • Focus on your core business. Because the provider takes care of the hiring process and the administrative burden.
  • Efficient up- and downscaling. Because it is on-demand, you can scale your team flexibly to the extent that you need the resources.

The disadvantages of IT staff augmentation

Although it can be an attractive model, it is obviously not suitable for any situation. Among the disadvantages of IT staff augmentation are the following.

  • Quality risks. It is easier to control and manage the quality of output of team members that are geographically and culturally close to the team.
  • Learning curve. On-boarding new employees might require extensive training to learn the context. For instance, the complexity of the code base, or domain specific knowledge.
  • Workflow adaptations. Not every company is experienced in working with remote team members. So turning to staff augmentation with remote developers might require changing the current way of working.
  • Employees vs contractors. Basically you are investing in talent that is not your staff. But then again, often the relationship is effectively long term. And it is also difficult to retain developers who are employees.

Staff augmentation vs software outsourcing

So when to choose for staff augmentation and when to go for software outsourcing? The key difference is in who manages the work. With staff augmentation you are in charge of the work. With outsourcing the provider is.

In the latter case you outsource an entire project. In this case, the provider is responsible for the end-result. The main advantage of outsourcing for you as a company is that you can shift the entire burden for a project to a third party.

The flipside of this coin is that you also lose control. One of the reasons that staff augmentation has become so popular is that nowadays software requirements are changing from week to week. If not from day to day. This does not work well in a relatively rigid relationship where the vendor has committed to a pre-determined end-result.

Overall you can choose for software outsourcing if you simply do not have the capacity or technical knowledge to manage the work internally. But if you want to stay more flexible, it’s better to go for staff augmentation, or for managed services…


Staff augmentation vs managed services

Managed services are basically a hybrid form of software outsourcing and IT staff augmentation. The difference with outsourcing is that managed services are a more permanent arrangement. The provider does not commit beforehand to an end-result, so the arrangement is more flexible.

But unlike with staff augmentation, under a managed service arrangement the provider is still in charge of managing the work. As a result the costs for managed services are generally higher than with staff augmentation. In addition, you also have less control and more dependency on the provider. And his ability to form a solid team.

Managed services are an attractive option if you lack the capacity and technical expertise to manage the work, but still would like to remain a certain degree of flexibility. However, if you want to be able to manage a custom recruited team by yourself, staff augmentation is the way to go.

Selecting the right partner

Usually the decision to work with an IT staff augmentation provider is triggered by the inability to find suitable talent on the local market. This especially applies to smaller businesses. When choosing a provider it is important to see whether they have experience with working with a company of your size. For example, is it possible to hire single developers? Or even part-timers?

To find the right partner is in any case the most important decision with regards to this way of working. Because a good provider will also help you with proper implementation: matching the right talent, proper onboarding and how to set up the team arrangement for success.

When selecting the provider, the following criteria are of special importance.

  • Track record. How long are they already in business? What is their company size? Can you get client reviews or references? Were they already successful with clients similar to you?
  • Pricing. Are their rates transparent, fair and competitive? But also realistic? Low rates are obviously attractive. But too cheap can be an indication the quality and service level won’t be up to par.
  • English proficiency. How is communication going in the sales trajectory? Are they able to communicate clearly in English? And are the candidates proficient as well?
  • Developer pool. How large is their developer pool? Do you get transparent access to candidates? And the opportunity to extensively interview and test them?
  • Performance data. Can they provide sufficient data on the candidates? How have they performed in the past? How do they score on tests? Not only technical tests. For instance, communication skills, situational awareness, abstract thinking and English language.

Staff augmentation best practices

Once the team is onboard, devote attention to the following.

  • Hardware. Make sure all team members have sufficient laptops, phones, internet connection, etc. Be clear with the provider upfront about who is responsible for this.
  • Meeting rhythm. Make sure you have regularly scheduled standups and meetings to discuss progress, milestones and metrics.
  • Clear guidelines. Establish unambiguous rules of engagement or a code of conduct for how you want to collaborate.
  • Socialize. Invest in (online) social gatherings, an always open video room and informal communication.
  • Provide proper tooling. Make sure everyone has access to the tools necessary to succeed and communicate.

The United States market for IT staff augmentation

So now that we’ve got the basics covered, let’s turn to what market has the largest potential for IT staff augmentation services: the United States. We do not have available data on actual spending on IT staff augmentation services. But overall projections of the tech jobs market give a good indication of the IT staff augmentation market size and trends.

The tech talent shortage in the United States

An analysis of the market from 2016-2019 showed employers in the US were only able to hire 6 for every 10 open tech positions. In stark contrast, companies made 12 hires per 10 job openings for all positions. In other words, it’s twice as hard to hire tech candidates.

That there is tension on the IT labor market is supported by other data as well. For instance, tech roles on average take 61 days to fill. And even 72 days for the subcategory of application developers. Meanwhile, non-tech roles take only 42.

According to CompTIA by the end of 2020 employment in tech occupations in the US stood at around 8 million. Out which 5.2 million were core tech roles (non-core roles include technician, technical engineer, installer and repairer). In 2019 they estimated 918,000 of IT job openings to go unfilled. That’s roughly 10% of the total and 15% of core tech roles.

The market trend for tech talent demand

This shortage is only expected to increase in the coming decade. Tech employment by 2030 is expected to reach around 9 million positions. So that’s an increase of 1 million. At the same time, there is a need for replacement of workers leaving the sector, due to retirement and other reasons. This is estimated to be around 580.000 per year.

So that means another 6.8 million tech jobs need to be filled with new job market entrants in the coming decade in the US! For comparison, the US currently produces about 65,000 students with computer science degrees each year.


This indicates a long term rising market trend for IT staff augmentation in the US. When we zoom in on core tech employment, we saw a steep increase from November 2020 into March 2021, from 5.2 million to 5.9 million. Similarly there was a strong pickup of tech occupation job postings. That is to say, with over 300,000 postings they are almost back at pre-Covid levels.

Best cities for tech jobs in 2021

The top ten metropolitan areas employ over 4 million tech industry and tech occupation workers. This amounts to around 1 in 3 tech workers in the United States. Obviously there is a strong correlation between the size of a city and the amount of tech workers employed there. The top 3 consists of New York, Los Angeles and Washington.


By looking at the amount of tech jobs added or lost in 2020, we can get an impression which cities have most momentum. In the top right of the above chart, you see the largest tech employment cities of the United States that also show a positive momentum. There is a distinct group of 7 cities: New York City, San Francisco, Washington DC, San Jose, Dallas, Boston and Seattle.

In the bottom right you see the large markets that have been underperforming in 2020. Los Angeles, Chicago and in particular Detroit have all lost tech jobs in the past year. While Austin, Denver and Phoenix are smaller markets, but have added a substantial amount of tech jobs.

US cities with strong tech economy

But some cities might be smaller than others, and still have a disproportionate demand for tech talent. For example, San Jose has the highest concentration of tech workers compared to its total number of workers: 34%. Consequently, the economic impact of tech on the local economy of San Jose is huge. With 60% it’s more than twice than in Seattle and San Francisco.


Absolute demand for tech workers is growing fastest in San Francisco, Seattle and Dallas. But when looking at relative demand (added tech jobs / existing tech jobs), we can see that the top 3 is formed by Austin, San Francisco and Kansas City. So these cities can be expected to show a strong increase in demand for IT staff augmentation services as well.

Moreover, in the above chart in the top right you can see which cities show a strong rate, while having a large part of its economy depending on the tech sector. They include San Jose, Seattle, San Francisco, Austin and Boston. These cities can be considered key targets for IT staff augmentation services.

Best states for tech jobs in 2021

Not surprisingly, tech employment is highest in some of the most populous states. The top 3 being California, Texas and New York. And also not surprisingly, there is a correlation with what happens on city-level.

In the chart below it can be seen that California and Texas have both super large tech job markets and show high absolute growth in tech jobs. And to a lesser extent this also counts for New York and Florida. So these 4 states can be considered the key tech employment states.


But when looking at economic impact, the ranking is Washington, California and Massachusetts. Absolute growth of demand for tech workers is strongest in Texas, California and Washington. It’s notable that New York is not even in the top-10 (#11). When looking at relative growth the list is topped by Utah, Washington and New Mexico.


The European market for IT staff augmentation

For Europe we can try to do the same. We are going to look at the tech talent shortage in Europe. And also we can try to get an indication of the market size and trends for IT staff augmentation there by looking at the tech jobs data.

The tech talent shortage in European countries

Unfortunately, no recent data is available on the tech talent shortage in the EU. In 2014, the European Commission warned Europe would lack up to 900,000 qualified ICT workers by 2021. The next year Empirica, a German statistics institute, revised this figure to 500,000.

Meanwhile, on average 58% of the companies in the EU that is trying to recruit ICT workers is experiencing problems filling their vacancies. This should count as a major indication that the talent shortage still is for real.

Currently, the European software developer population is still growing. In 2019 it was estimated at around 6.1 million. This accounted for a 7% year on year growth. However, demand was expected to grow by more than 10%. So it’s fair to assume that the tech talent gap is widening rather than decreasing.


In the above image, you can see the growth in overall demand for tech jobs illustrated. Overall the search volume for tech jobs across western Europe has continued to increase significantly.

Best countries for tech jobs in 2021

To analyze the best EU countries for IT staff augmentation we are going to focus on countries that we expect to be a substantial net importer of such services: UK, Ireland, Netherlands, Belgium, Germany, Sweden, Norway, Denmark, France, Austria and Switzerland.

In the table below, it can be seen that when you compare the countries among each other, the largest markets are Germany, United Kingdom and France. This chart is based on the number of Javascript vacancies published on LinkedIn and Indeed for those countries. But we’ve run this excercise on a variety of search queries, each time roughly with the same result.


EU countries with tightest IT job market

To gauge market pressure we can look at in what countries it is difficult to fill ICT vacancies. Research by the EU shows that the percentage of companies reporting difficulty filling their ICT vacancies is highest in Austria, Netherlands and Germany. Furthermore, it shows that Sweden and Belgium saw a significant decrease in difficulty during 2020. This indicates a loosening market in those countries. For the rest, Covid does not appear to have caused a significant relief in the demand for tech talent.


Other factors that come into play when judging the attractiveness of the market – apart from sheer demand – include the following.

English proficiency. Obviously best in the UK and Ireland. But also very high in the Netherlands. And to a lesser extent in the Nordic countries. Relatively low in the major markets Germany and France, also lower in the other German and French speaking countries.

Openness to outsourcing and similar services. The Netherlands and the Nordic countries have a reputation for being prone to international collaboration. The UK has a lot of historic ties through its commonwealth. France as well, mostly with Francophone countries in Africa. France and the other countries tend to have more specific preferences. And they are also perceived to have a more limited appetite for outsourcing and similar services.

Conclusion: IT staff augmentation post-Covid

In conclusion, it is clear that demand for tech talent will remain strong. That Covid at best (or worst if you will) caused a temporary pause in the market. But that the tech talent shortage will continue to drive demand for IT staff augmentation services. And that counts for both the US and western Europe.

In our experience, it’s in particular the smaller sized companies that have trouble finding solutions for the scarcity of talent. For those companies especially, staff augmentation can be a way to get access to good developers. And build a team with them for the longer term.

The silver lining of the past – in a humanitarian sense – disastrous year is that acceptance for working with remote teams has grown tremendously. And in its slipstream the knowledge base, the experience, the tooling and the processes to make it a success.

Tunga can help you build your team of experienced software engineers. So that you can focus on your other priorities. If you want to learn how, please don’t hesitate to get in touch with us.