How to Choose the Right Outsourcing Model for Your Business

There are many reasons to outsource.
‍

As a recruitment strategy, it can help you cut costs in times of economic uncertainty, fill skill gaps, and accelerate your scaling process.
‍

Yet there isn’t necessarily a one-size fits all outsourcing model. Different businesses will benefit from different outsourcing models. 
‍

In this guide, we’ll walk you through how to settle on the right one for your specific needs. In addition, discover how Insightful’s tools for monitoring computer activity can provide support no matter the outsourcing model you chose. 

‍

Types of Outsourcing Models

‍

Generally, there are four types of outsourcing models you can employ for your business.

‍

Before you pick the one that best suits your needs, though, you’ll need to consider where you’ll hire from:

‍

• Nearshore - Hiring from bordering countries allows you to open up the talent pool and find the right team for a lower cost. There’s a lower risk of timezone and cultural differences when you stick to neighboring countries.
  
  
• Farshore - Farshore outsourcing is when you look to countries with vastly different timezones and work cultures for cost-effective hiring. While you often have to contend with cultural differences, you can save a lot of money and find dedicated teams.
  
  
• Onshore - Onshore outsourcing implies the outsourced team you hire is within a stone’s throw from your business HQ. It could be within your city, state, or a nearby state. The idea is that you hire a team that can seamlessly integrate with your own and have the opportunity to visit them in person if necessary.
  
  
• Offshore - Offshore outsourcing is looking abroad to other countries, for example, in Europe, where you may find specialized talent for various business services.

‍

Now that you have an idea of where you’ll be looking to find your outsourced talent, let’s assess the various outsourcing models available to you.

‍

Fixed Price

‍

The fixed-price outsourcing model is for situations where you have a clear timeframe and budget in mind for a particular project.

‍

With this model, you’re effectively purchasing a done-for-you service at a fixed price for a one-off project. If you have a looming deadline and are willing to pay a premium to have the work outsourced and completed quickly, this model could be the perfect fit.

‍

You won’t be able to micromanage the team or add additional specifications once you’ve paid for the service, so for certain types of projects, such as software development, it can be a risky model.

‍

Pros

‍

•  Perfect for completing one-off projects quickly
  
  
•  More affordable than having employees run overtime to get a project finished

‍

Cons

‍

•  It’s an inflexible model that will often only be a last resort
  
  
•  It can be more costly than working out a long-term arrangement with an outsourced team

‍

Dedicated Team

‍

Another option for outsourcing work is to hire a dedicated team to complete the work.

‍

With this outsourcing model, you can work closely with the dedicated team to make sure you’re satisfied with the end result. After briefing them on the project details, you can let them do the heavy lifting as they’ll be experts in their field or at least specialized in a particular skill or industry.

‍

This is an excellent way of covering skill gaps in your company and doing so at relatively little expense.

‍

Pros

‍

•  Work with the team to get the desired results
  
  
•  Plug an existing skill gap by hiring specialist talent 

‍

Cons

‍

•  While the team may have the talent, they may lack communication skills or other soft skills that make it hard for them to integrate with your company culture

‍

Time and Materials

‍

With a basic time and materials model, you agree to hire an outsourced team and pay them their hourly rate plus the cost of the resources they’ll use.

‍

This is a straightforward outsourcing model that can work for short-term partnerships, but is better suited to long-term arrangements. If you’re looking to build an outsourced arm of your business and create an ongoing work relationship with an outsourced team, this is the most viable model.

‍

Pros:

‍

•  You can negotiate a long-term working arrangement
  
  
•  You save money as you won’t have to cover typical employee expenses with an outsourced team

‍

Cons:

‍

•  It can be tricky to integrate and track the performance of an outsourced team in the long-term

‍

Factors to Consider

‍

Whenever outsourcing is an option on the table, there are various factors you should take into account before working with an MSP (managed service provider) and hiring an outsourced team.

‍

Project Scope

‍

What you need from outsourcing will largely depend on your project scope.

‍

Before you start looking for an MSP, make sure you have a clear idea of project requirements to share, such as:

‍

• Budget - The budget you assign to a project can determine where you should look to outsource. For example, the lower it is, the more likely you’ll need to look further afield to find the most cost-effective options.
  
  
• Timeline - Your project timeline can dictate which type of outsourcing model will make the most sense. For a tight deadline, you might want a fixed-price model, but for a longer one, a dedicated team might work better.
  
  
• KPIs - Sharing your KPIs allows the outsourced team to understand exactly what you hope to get out of the working arrangement. The more specific you can be, the easier it’ll be to hold the outsourced team accountable for results. Bear in mind you can also monitor computer use with monitoring software for laptops or computers to make sure your performance metrics are met.

‍

Outsourced Team Experience

‍

During the hiring process, it’s important that you take the time to evaluate the outsourced team’s experience and suitability for the project.

‍

Just because you may be saving money when you outsource, it doesn’t mean you have to settle for less.

‍

Make sure you thoroughly vet the MSP or outsourced team and understand exactly what they can bring to the table and what they’ve done for other clients in the past. Hiring the wrong outsourced team can prove to be a costly setback.

‍

Performance Tracking

‍

Outsourcing can present a risk since you’re hiring from outside your company.

‍

It can feel like you’re diminishing your control over the specifics of the project, and worse still, give you the impression that you have little ability to monitor employee activity computer and, in turn, performance.

‍

Sure, you can get a report from your outsourced team at the end of each week, but without a day-to-day worker tracking system, you can’t be sure that time theft isn’t an issue.

‍

Without computer surveillance in the workplace, you’ll need to look to a work from home employee monitoring software as your employee performance tracker.

‍

One of the best ways to remedy this concern is with work computer monitoring software like Insightful. When you use activity tracking, you can automatically collect outsourced teams’ time data, and see it in an employee performance dashboard.

‍