Contract Engineering, or Staff Augmentation?

Businesses have a choice to design their products using inside engineers, outside contractors, or a mix of both. For organizations without an engineering team, the reasons to hire a contract engineer may be obvious. But for companies with an on-site engineering team, what are the benefits to hiring an outside contract engineer?

Employee Overhead

Hiring a full time employee is expensive, and the expenses associated with one hire go well beyond the salary of that employee. Employee overhead includes paid time off, health insurance, dental and vision care, matched retirement contributions, and numerous other benefits.

A new hire will need an office desk and computer equipment. They will need to be trained on everything from how to file for time off to learning about document control. Someone will need to configure their laptop, provide them with email and network access, and access to the building too. Corporate policy might require a photo for an employee lanyard, or background checks to ensure adequate security clearance for the premises.

Only when those pieces are in place can the new employee actually begin their work. But the expenses don’t stop there. Businesses with employees also need to pay unemployment taxes for each employee, and workman’s compensation taxes too. If the company is enrolled in an outside payroll service, they will also want a slice of the pie.

Numerous online publications suggest that once all employee overhead is tallied, the total cost of an actual employee can be as high as 1.4 times that employee’s salary. And these costs don’t consider whether the new employee is a good fit among your team, and how the employee will contribute to (or take away from) company culture.

Staff Augmentation

“Staff augmentation can be a winning strategy for small or mid-sized companies, allowing them to maintain forward momentum without committing to new full-time hires.”

When it’s time to grow your organization, but you aren’t ready to bring on a full time hire, contract engineers can be a great way to fill the gap. Contract engineers cover their own expenses, making the primary expense to the employer the hourly rate for the engineer to carry out their work.

It’s 2020, and with team-centric platforms that support messaging and video conferencing (Slack and Zoom are two personal favorites), it’s easier than ever to bring on remote team members. (Rumor has it that Stack Overflow requires on-site employees to join meetings via video conference, creating a quiet and interruption-free work environment with a level playing field for all employees regardless of their location.)

In companies that already reap the benefits of a distribute team, “staff augmentation” is more likely to be in the corporate vernacular than “contract engineering” or “outsourcing”.

Staff augmentation can bee a winning strategy for small or mid-sized companies, allowing them to maintain forward momentum without committing to new full-time hires. Outside help allows companies to respond to short-term demands without worrying about whether there will be enough resources to keep new employees if work slows down in the future.

Valuable Insight

Companies who work solely with internal engineers can develop a culture where engineering anecdotes get passed from one employee to another, locking in out-of-date design strategies while forcibly ignoring new approaches and new components due to the folklore that surrounds them. While employee engineers may be loyal to specific design recipes and component manufacturers, contract engineers who have worked with numerous clients are more likely to have experience with a wider array of projects. They are more likely to approach a design with new angles in mind, and can bring valuable insight from their prior projects into the doors of a growing business.

Core Competencies

In the fast-paced world of start-ups, leaders are pressured to spend money, grow as quickly as possible, and generate value for investors. But what happens when a team of geologists, biologists, and statisticians suddenly need to design a circuit board?

Smaller companies tend to combat new challenges by giving their employees multiple hats, encouraging non-engineering employees to design circuits without a sufficient background in electronics design. This leaves valuable experts on the team underutilized, distracts daily operations away from core competencies, and stunts company growth. This strategy can lead to numerous product iterations before a desirable solution is achieved. Even then, bringing in a contract engineer might be necessary to push the design toward a reliable and production-ready solution.

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Whether your organization is lacking an in-house engineering team or your business is going through a sporadic period of growth, a contract engineer might be the perfect way to augment your team. Contact the Engineering Design Group today, and let’s transform your vision into reality.