Squad as a Service: what it is, when to hire and how much it costs

If your company needed to double its software development capacity in 30 days, what would happen?

For most technology managers in Brazil, the honest answer is that it wouldn’t be possible. The hiring process would take weeks, onboarding months, and the internal team is already stretched to its limit. That is exactly the scenario that the Squad as a Service model was created to solve.

In this guide, you will understand what the model is, how it works in practice, when it makes sense to hire one, how much it costs and how to compare it with other alternatives available in the market, including NextAge’s Staff Augmentation, an evolution of the model that solves problems the traditional squad does not.

What is Squad as a Service?

Squad as a Service (SqaaS) is an IT outsourcing model in which a company hires, externally, a complete and dedicated multidisciplinary team to work on its technology projects.

The squad can include front-end and back-end developers, software engineers, QA, tech lead, UX/UI designer, product owner and Scrum Master, according to the needs of the project and the company’s current stage.

The central difference from hiring individual professionals (what the market calls body shop) lies precisely in the idea of a team: you do not receive a professional to fit into your existing team; you receive a group that already operates together, with an established agile methodology, defined sprint rituals and technical management included.

The model also goes by other names: dedicated agile team, team as a service or on-demand squad. All refer to the same logic, having, in practice, an internal technology team, without the hiring overhead, without the recruitment timeline and with the flexibility to scale up or down as demand changes.

How does it work in practice?

The process generally follows these steps:

• Diagnosis and alignment: the contracting company describes the project, objectives, preferred technology stack and expected timeline. The provider maps the required competencies and proposes the team composition.
• Squad formation: the specialized company selects the appropriate professionals, ideally already validated on previous projects, and forms the team according to the defined profile.
• Onboarding and immersion: the squad goes through an integration phase with the product, culture and processes of the contracting company. In more mature models, this period comes at a reduced cost, precisely to avoid penalizing the client during the initial learning curve.
• Sprint-based operation: the team works in short cycles, usually two weeks, with agile ceremonies: planning, daily, review and retrospective. Deliveries are continuous and trackable, giving the manager real visibility into what is being produced.
• Shared management: product management stays with the client; technical and people management stays with the provider. In hybrid projects, the squad works alongside the internal team, sharing responsibilities and decisions as the context requires.
• On-demand scalability: the squad can grow, shrink or be reconfigured as the project evolves, with no employment law processes involved.

Squad as a Service, Body Shop and Outsourcing: what is the difference?

This is one of the most common points of confusion in the technology market. All three models are forms of outsourcing, but with quite different approaches.

In the Body Shop model, the company hires individual professionals who are allocated and remain under its own management. You handle the backlog, the methodology, the rituals and the performance of each person. The provider, in this case, acts as a recruitment intermediary; operational responsibility is yours.

In Traditional Outsourcing, the company outsources a service or project with a more closed scope. The provider takes on end-to-end delivery, but with less flexibility for changes along the way. It is appropriate when the scope is well defined from the start.

In Squad as a Service, you hire a complete team that integrates into your operation, works on your backlog in sprints and can be reconfigured as needs change. Technical management is included, but product direction stays with the client. It is the model with the best balance between control and flexibility.

There is also a fourth alternative worth highlighting: The new Staff Augmentation model, developed by NextAge to solve the failures that companies repeatedly report with traditional outsourcing. While the body shop only allocates and conventional outsourcing often “outsources and disappears,” Outsourcing 2.0 maintains active management by a Tech Lead, rigorous validation of professionals before allocation and guaranteed replacement when necessary, with contractual benefits during the onboarding period. Learn more about the model here.

Why is this model growing in Brazil?

The market context explains the acceleration of this model. It is not a behavioral trend; it is a response to a structural problem.

According to Brasscom, Brazil needs 159,000 new IT professionals per year, but trains only 53,000. The accumulated result: a deficit of more than 530,000 unfilled positions between 2021 and 2025. The average hiring time in the technology sector already exceeds 50 days, according to a GeekHunter survey published in 2024.

At the same time, demand for software development keeps growing. In 2025, the Brazilian technology market grew 18.5% — above the global average of 14.1% — reaching US$ 67.8 billion, according to a study by ABES in partnership with IDC. On a global scale, Gartner projects that the IT outsourcing market will grow 6.7% per year, reaching US$ 470 billion.

In Brazil, searches for “squad as a service” grew more than 50% in the last 12 months, according to Google Trends data.

There is also the factor of direct hiring costs. A senior developer with a salary of R$ 16,000 generates a total cost that can exceed R$ 30,000 per month when adding FGTS, employer social security contributions, vacation pay, 13th salary, benefits and the HR structure required, reaching up to three times the gross salary, according to calculations by FGV in partnership with CNI. Multiply that by five professionals and outsourcing starts to look quite different.

When does it make sense to hire a Squad as a Service?

Not every scenario justifies hiring an external squad. But there are situations in which the model delivers results that the internal team simply cannot, whether due to a lack of capacity, time or specific profiles.

• Projects with aggressive deadlines: When it is necessary to accelerate a delivery to take advantage of a market window or meet a critical deadline, rushing to hire would take months. An experienced squad is up and running in weeks and starts delivering within days of onboarding.
• Backlog peaks or seasonal demand: The internal team is overloaded and a backlog is not moving forward. The squad acts as a temporary capacity boost, without the commitment of permanent hiring and without permanently impacting payroll.
• Lack of specific competencies on the team: The project requires skills the team does not have: machine learning, application security, microservices architecture, native mobile development. Hiring internally for a one-off competency is expensive, slow and, in most cases, difficult to justify to finance.
• MVP or new product development: For scale-ups and startups that need speed to validate hypotheses, a dedicated squad prototypes, develops and iterates far more quickly. Time-to-market drops significantly when there is no competition with the main product’s backlog.
• Legacy system modernization: Migrating or refactoring legacy systems requires full dedication and a varied set of skills: architecture, integrations, regression testing. Assigning the internal team to this task almost always means pausing the new product roadmap.
• Scaling without opening headcount: When there is pressure to grow delivery capacity, but budgetary or strategic constraints prevent mass CLT hires, the external squad is the fastest and most predictable alternative.
• Introducing agile methodology internally: If the company does not yet operate in squads, bringing in an external team that already runs on Scrum or Kanban can be the trigger to transform the internal development culture from the inside out.

How much does a Squad as a Service cost?

This is the question every manager asks, and the honest answer is: it depends on the team composition, the technology stack, the required seniority level and the chosen partner. But it is possible to work with real reference ranges.

Cost by profile (Brazilian market, 2025/2026)

Reference values for the Brazilian market in 2025/2026, based on NextAge’s Squad Cost Guide. Values vary according to stack, region and partner.

The cost of a full squad

A typical five-person squad, two mid-level devs, one senior, one QA and one tech lead, costs between R$ 57,000 and R$ 95,000 per month in outsourcing, depending on the composition and the chosen partner.

The same team on CLT contracts can exceed R$ 150,000 per month when all employer charges are included. This makes outsourcing not only more agile, but frequently the more financially efficient option.

What is included in the cost?

In serious Squad as a Service models, the monthly fee already covers: salaries and people management (the provider’s responsibility), employment taxes and contributions (FGTS, vacation, 13th salary, employer INSS), professional replacement when necessary, technical oversight by a tech lead or delivery manager, and project management tools.

What varies between providers, and makes all the difference in practice, is the quality of professional validation, the presence (or absence) of active management throughout the contract, and what happens when someone underperforms or leaves the team.

How to calculate ROI

The basic return on investment calculation follows this logic:

ROI = (Financial Return Obtained – Squad Cost) ÷ Squad Cost × 100

A practical example: a squad with a monthly cost of R$ 70,000, a four-month project, total investment of R$ 280,000. If the project generates R$ 1,200,000 in revenue or avoided costs, the ROI is 328%.

But the ROI of a squad goes beyond direct financial return. Also consider:

• Time gained: a well-calibrated squad reduces time-to-market by weeks or months, and weeks have real value in competitive markets.
• Opportunity cost: what the internal team stops doing when overloaded with demands that could be handled externally.
• Cost of non-delivery: contractual penalties, lost clients, roadmap delays that block other projects downstream.
• No employment liability: at the end of the project or with a scope change, there are no terminations, notice periods or labor disputes.

What to evaluate before hiring

Not every company offering squads delivers the same result. Before signing any contract, it is worth investigating these points carefully:

How are professionals validated? Do they go through technical and behavioral assessment? Do they work on the provider’s internal projects before being allocated to clients? A strong résumé is not a guarantee of delivery.

Is there active management or just allocation? Is there a tech lead or delivery manager monitoring the squad’s productivity? Or does the provider simply “deliver the resources” and step back? This difference is enormous in practice.

What is the replacement policy? What happens when a professional underperforms or resigns? How quickly does the provider replace them? Who bears the cost of the unproductive period?

How does onboarding work? Is there an adaptation period with a reduced or differentiated cost? How is the squad integrated into the company’s culture and processes?

Does the partner have its own methodology? Does it use agile management tools, performance monitoring and structured documentation? Or does it operate in an improvised way?

Are there verifiable cases with measurable results? Ask for more than client logos: ask for metrics, timelines and testimonials that can be validated.

These criteria matter because the difference between a squad that accelerates a project and one that generates rework and frustration lies exactly in these details — and they rarely come up in the sales pitch.

If your company has already had bad experiences with traditional outsourcing, professionals who did not deliver what their résumés promised, providers who disappeared after the contract was signed, frequent team changes without notice, NextAge’s Staff Augmentation was developed to solve exactly that. With rigorous validation, a Tech Lead monitoring each squad and contractual benefits during the onboarding period, the model has already served more than 600 companies across 10 countries over 19 years of operation.

Squad as a Service and Artificial Intelligence: what has changed in the model

Squad as a Service is undergoing a significant transformation. The best providers already integrate AI into development processes, which raises delivery capacity without proportionally increasing costs for the client.

In practice, this translates into: AI-assisted code review (with reduced bugs in production), test automation with greater coverage and shorter cycles, automatic code and process documentation, smarter CI/CD pipelines and accelerated code generation with specialized human review.

Methodologies such as NextFlow AI combine human expertise with AI at every sprint, enabling deliveries up to 40% faster than the traditional development model, which completely changes the cost-benefit equation of the squad.

This means the relevant question for 2026 and beyond is not just “how much does a squad cost?” but “how much does this squad deliver per dollar invested?” When productivity increases by 40% with the same team composition, the effective cost per delivery drops significantly.

Frequently asked questions

What is Squad as a Service?

Squad as a Service is an IT outsourcing model in which a company hires a complete and dedicated multidisciplinary team (with developers, QA, tech lead and other profiles) to work on its projects using agile methodology. The squad operates in a dedicated manner, like an internal team, but without the overhead and timeline of direct hiring.

What is the difference between Squad as a Service and body shop?

In the body shop model, you hire individual professionals who remain under your management. In Squad as a Service, you hire a complete team with technical management included and an established agile methodology. The squad arrives ready to operate; in the body shop, you need to assemble and manage the team yourself.

How much does a development squad cost in Brazil?

A five-person squad (two mid-level devs, one senior, one QA and one tech lead) costs between R$ 57,000 and R$ 95,000 per month in outsourcing. The same team on CLT contracts, with all employer charges, can exceed R$ 150,000 per month. See the full cost breakdown in our guide for CTOs.

Is Squad as a Service the same as outsourcing?

Not exactly. Traditional outsourcing generally involves a project with a closed scope, where the provider manages the process from end to end. Squad as a Service is more flexible: the team integrates into your operation, works on your backlog in sprints and can be reconfigured as needs change.

What is NextAge’s Staff Augmentation?

It is a methodology created by NextAge that goes beyond the traditional squad model. It includes rigorous validation of professionals before allocation, productivity monitoring by a Tech Lead, an agile replacement policy and an onboarding period with differentiated costs. The model was developed to eliminate the main problems of conventional outsourcing. Learn more here.

How quickly can a squad be allocated?

Specialized companies can allocate a full squad within a few business days to a few weeks, depending on the complexity of the required profile. This is far faster than the traditional hiring process, which takes an average of more than 50 days in Brazil’s technology sector.

Does Squad as a Service work for smaller companies?

Yes, especially for scale-ups and startups that need development speed without building a large internal team. The model allows starting with a smaller squad and scaling as the product and business grow.

Want to understand how NextAge forms and manages squads? Learn about Staff Augmentation, Managed Squads and NextFlow AI,  three complementary models for different levels of demand and IT maturity.