IT Staff Augmentation 2023 Report: A Comprehensive Overview

BY Ernesto Spruyt · 3 MIN READ

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

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 unfamiliar with “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 to flexibly and quickly expand 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.

The provider employs these new team members. 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 prevalent in the IT sector. On the one hand, it is often difficult to find qualified staff locally. And on the other hand, software development lends itself well to 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 unsuitable for any situation. Among the disadvantages of IT staff augmentation is the following.

  • Quality risks. It is easier to control and manage the quality of output of team members geographically and culturally close to the team.
  • Learning curve. Onboarding 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 working method.
  • Employees vs. contractors. You are investing in talent that is not your staff. But then again, often, the relationship is effectively long-term. And it is also challenging 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 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 flip side of this coin is that you also lose control. One of the reasons that staff augmentation has become so popular is that 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 result.

Overall you can choose software outsourcing if you 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 managed services…


Staff augmentation vs. managed services

Managed services are 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 to an end result beforehand, so the arrangement is more flexible.

But unlike with staff augmentation, the provider is still in charge of managing the work under a managed service arrangement. 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 attractive if you lack the capacity and technical expertise to manage the work but still would like to maintain 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 qualified talent in the local market. This especially applies to smaller businesses. When choosing a provider, it is important to see whether they have experience working with a company of your size. For example, is it possible to hire single developers? Or even part-timers?

Finding the right partner is, in any case, the most important decision with regard 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 particular 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 attractive. But too cheap can indicate 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.

Staff augmentation best practices

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

  • Hardware. Ensure all team members have good 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 clear rules of engagement or a code of conduct for how you want to collaborate.
  • Socialize. Invest in (online) social gatherings, a permanently 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 IT staff augmentation services spending. 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 could only hire 6 for every ten 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 in the IT labor market is also supported by other data. For instance, on average, tech roles 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. Of these, 5.2 million were core tech roles (non-core roles include technician, technical engineer, installer, and repairer). In 2019 they estimated 918,000 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 to replace 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! 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. There is a strong correlation between the size of a city and the number of tech workers employed there. The top 3 consist of New York, Los Angeles, and Washington.


By looking at the number of tech jobs added or lost in 2020, we can see which cities have the most momentum. In the top right of the above chart, you see the largest tech employment cities in the United States that also show 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 underperforming in 2020. Los Angeles, Chicago, and 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 solid tech economy

But some cities might be smaller than others and still have an excessive 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 enormous. With 60%, it’s more than twice that in Seattle and San Francisco.


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 are formed by Austin, San Francisco, and Kansas City. So these cities can be expected to show a substantial increase in demand for IT staff augmentation services.

Moreover, in the above chart in the top right, you can see which cities show a strong rate while having a large part of their economy depends on the tech sector. They include San Jose, Seattle, San Francisco, Austin, and Boston. These cities can be considered critical 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 are California, Texas, and New York. And also, not surprisingly, there is a correlation with what happens at the city level.

The chart below shows that California and Texas have large tech job markets and high absolute growth in tech jobs. And to a lesser extent, this also counts for New York and Florida. So these four states can be considered critical tech employment states.


But the ranking of economic impact in Washington, California, and Massachusetts. The absolute demand growth for tech workers is strongest in Texas, California, and Washington. 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 following year Empirica, a German statistics institute, revised this figure to 500,000.

Meanwhile, on average, 58% of the companies in the EU trying to recruit ICT workers are experiencing problems filling their vacancies. This should be a significant indication that the talent shortage is still accurate.

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 increased significantly.

Best countries for tech jobs in 2021

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

The table below shows that when you compare the countries to each other, the most important markets are Germany, the United Kingdom, and France. This chart is based on the Javascript vacancies published on LinkedIn and Indeed for those countries. But we’ve run this exercise on various search queries, each time roughly with the same result.


EU countries with the tightest IT job market

To gauge market pressure, we can look at what countries it isn’t easy 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 significantly decreased difficulty in 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 market’s attractiveness – apart from sheer demand – include the following.

English proficiency. Best in the UK and Ireland. But also very high in the Netherlands. And to a lesser extent in the Nordic countries. Germany and France are relatively low in the major markets and 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, mainly with Francophone countries in Africa. France and 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, the 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 talent scarcity. For those companies especially, staff augmentation can be a way to access good developers. And build a team with them for the longer term.

The silver lining of the past – in a humanitarian sense – the 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 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 contact us.