Make the choice to scale your technology team

In the technology world, ambitious and innovative teams can quickly reach their capacity. Successful companies have no shortage of asks. The answer is scale. Here are five steps to unlock budget and achieve scale in your organization.

Two years ago, I was managing a team of seven: An architect, two product owners, a scrum lead and three engineers. In three months, we had grown to a team of 20. In six, we’d grown to 60. In a year, we were more than 120. I’ve repeated this pattern at several companies.

"Leadership is a behavior, not a title" - Stephen Covey

Most of the growth leveraged staff augmentation contractors. The result was driving a software release train that outperformed others. Our teams were high-speed rail, and the others were steam engines.

Understanding the contractor landscape

Getting headcount is intentionally challenging and time-consuming. It’s painful for organizations to reduce headcount, but contractors can be scaled up and down quickly.

There are two reasons to hire contractors:

Immediately acquire specific skills and capabilities.
Temporarily increase capacity.

Contractors demand a premium for the same two reasons.

There are two types of contractors:

Fixed Fee, a.k.a. Managed Outcome – These are encapsulated projects. The contracting company, a.k.a. Service Integrator (SI), agrees to produce an outcome (i.e., install a software system, create an app, etc.) for a fixed fee. The hiring manager doesn’t care if the SI uses one person or a thousand. The cost is fixed, and they work until the outcome is met.
Staff Augmentation, a.k.a. Staff Aug – These are contractors who are treated like temporary employees. They are part of the team, and their work is managed like the rest of the team. Career progression is the core difference between managing an FTE and managing a contractor. For the contractor, there is no performance management. If they don’t perform, they are dismissed.

If you can manage a team, avoid fixed fee

Over the span of a 20-year technology career, most managers I've worked with use the fixed fee model. In their eyes, each contractor must meet both 1 and 2 above, and the fixed-fee model reduces risk.

Many don’t know service integrators charge a premium for fixed fee. When I managed a delivery team, we called it “risk uplift.” The contracting company is accepting the risk of delivering on time, despite all the unknowns at the client company. The client may have outdated systems (probably), antiquated processes (likely) or unenthusiastic cross-team partner dependencies (perhaps).

If the client was a known entity, a place the team had experience working, then the risk uplift could be 15%-25%. For a particularly risky client, it could be 35%-50%.

Working as a delivery manager for a service integrator, I could not turn down business. But I could charge so much that the client would either decline or be worth my team’s time.

The First $20 Million Is Always the Hardest – Book title by Po Bronson

Here are five steps to unlocking budget and scaling your team:

Step 1: Renegotiate old contracts. Tell your list of vendors to reduce their prices by 15% or RFP the solution.

This tactic used to feel like brinksmanship, but I’ve come around to appreciate it. Competition is fierce. Every company needs to minimize cost and maximize shareholder value. When playing a contact sport, the players wear pads. This is no different.

Step 2: Replace underperforming resources. Every team I’ve ever inherited has had a handful of folks who had been there since the epoch and spent their day sandbagging.

This may sound rough, but if the resource is not providing value exceeding the contract price, then they should not be on the team. Replace them with someone who will.

Don’t confuse price and value

Don’t confuse this step for replacing someone with a cheaper contractor. Value is the most critical metric. If I have a talented, hardworking resource on my team charging $200 per hour and I replace them with a less experienced, slower resource who charges $100 per hour, I did not save half. I wasted $100 per hour.

Step 3: Cut the fat. Is there a support contract you pay for but haven’t used in a year? Cut it. Is there a piece of software seldom used by your business stakeholders? Cut it. Not sure who still uses it? Turn it off for three days and see how many calls you get.

Step 4: Staff up. It’s about the person, not the company.

I keep good people around. I call it “the band," and I always get the band back together. There are contractors who I have worked with for 15 years that I bring with me to every role.

These are people whom I trust. I trust their capabilities. I trust that if I’m not around they will do the right thing.

This is the most critical step in scaling because your team is your ability to scale yourself. Comprise your team of people who can execute with minimal direction. Those who turn the gray ooze of business stakeholder requests into black-and-white software.

Step 5: Always be closing. Sell. As they say, 'beat your feet on the concrete' – proactively seek out new opportunities and stakeholders.

You’ve found budget. You’ve cut out underperformers. Trimmed the fat. Staffed up. You’re cooking with a smooth agile release train and delivering value to your stakeholders every sprint.

The last step is to find more stakeholders. There is a business stakeholder out there who can use the software you have built. They might even have budget to fund new value-generating capabilities.

This step is essentially becoming an internal consultant. Rather than business stakeholders going directly to service integrators to get something built, they can come to you.

Collecting that budget and delivering for a wider group of customers is the path to scaling your team.

Conclusion

Remember that scale is a choice. While the pressure to grow in the technology world is undeniable, giving in to reactive scaling can be costly and inefficient. By taking a strategic, budget-conscious approach, technology leaders can follow these five steps to take control of their growth trajectory: renegotiate contracts, optimize resources, eliminate unnecessary expenses, build a strong core team, and seek out new opportunities proactively. This approach empowers them to move beyond just reacting to demands and instead build teams that are efficient, innovative, and aligned with overall business goals. In today's competitive landscape, scaling wisely is not just about managing costs, but about building a sustainable and impactful technology engine for the future.