outsourcing models

Do you want to cut operational costs but retain, if not increase, the integrity and efficiency of your company? Then, it would be worth your time to consider outsourcing by looking at these 5 industry models. With burgeoning vendors and outsourcing hosts halfway across the globe such as in India, Philippines and Eastern Europe, looking for a competent outsourcing partner can be very easy.

Anindya Bhattacharya, an outsourcing expert from The City University of New York (CUNY), said that outsourcing can give “freedom [to a firm] from an internal source to an external source. Outsourcing can provide dramatic cost-savings... and leverage resources to sustain a competitive advantage.” The challenge is simply to ascertain which outsourcing setup is fit for your organization.

Now, this challenge can be simplified by carefully considering the five outsourcing models:

  • staff augmentation
  • out-tasking
  • project-based outsourcing
  • managed services
  • and build-operate-transfer (BOT)

...and deciding which of these suit your company's needs. Each one has its own merits but, suffice to say, can be summarized into the following aspects:

  • Strategic priority: “How much process or strategies are you willing to control and augment in support of your business objectives?” and
  • Risk tolerance: “What type of vendor-client relationship are you comfortable with?”

Answers to these questions put your organization a step closer to the right outsourcing setup.

Staff Augmentation

This is the most basic of all outsourcing models. You add contractors to increase your output as demanded by the organization. You still control all resources but this setup allows add-on services which are presently deficient in your company (i.e. support services for market expansion). In addition to being the most basic setup, this has the least risk among all the outsourcing models. You may use this to expand current capacity to serve short-term immediate business needs.

Outsourcing model in action: iBeam Solutions used staff augmentation as a solution to their client Inoveris by providing the space and personnel requirement for business requirements. Instead of hiring new people and expanding space, Innoveris used outsourcing as an opportunity to cut down costs, which allowed them to save US$ 10,000 per month and focus on their core competencies.