Outsourcing Models for Small and Medium Businesses: How they help?

According to Statista, the international outsourcing market amounted to $92 billion in 2019 and showed no signs of slowing down. While the primary motivation has always been associated with cost-cutting, there are several other reasons a company outsources some of its operations.

Outsourcing is not only a matter of convenience for small and medium businesses, but it is also a pre-requirement for gaining an edge over your competition. Small and medium businesses are often challenged by a lack of access to the economies of scale that allow them to compete with the big whales of the industry effectively. Outsourcing allows them to leverage global talents and economies of scale without having to invest millions of dollars in upgrading processes, technology, personnel, and equipment needed to compete in a market. This capital outlay often cuts down margins for many small or medium-sized businesses. So, if you’re a small or medium business looking to up your game in a competitive scenario, outsourcing can help you emerge from it.

It helps you establish robust business processes, work on things on a broader scale, address the issues you may have faced as a small or medium-sized company and better position you to establish long-term success. There are multiple outsourcing models for small and medium businesses that can help overcome different barriers, here are a few you should know about:

Insourcing or Managed Operations – Seat-based Outsourcing

One of the primary issues small and medium businesses face is adding and retaining skilled resources to their in-house team for the foreseeable future. They may not have the space to hire an in-house team or the resources to onboard recruits. Here is a model that can help overcome this conundrum.

This model is a seat-based outsourcing engagement model where you involve a partner in the off-shore location to set up your overseas division and get them to handle facilities, IT recruitment and HR, while you are responsible for, training, quality and productivity. This model is more suitable for process-oriented or repetitive task-oriented functions such as bookkeeping, customer support service, inbound call centre services, chat support, telemarketing etc.

The model helps add specific candidates who will complement the existing team and meet the project’s requirements. Moreover, it gives complete control of the project and helps you manage your team however you find best for your business.

The major benefits of the model include:

• Minimal investment in infrastructure
• Zero recruitment cost
• Low overhead expenses
• No location limitation

Outsourced Full-Time Employee Model – Solution-based Outsourcing

In this model, the remote team is dedicated specifically to a process. Often small and medium businesses need staff for a specific project. But, the lack of qualified job applicants or the lack of relevant experience can be a challenge for a business owner to find a long-term solution. This model helps fill that gap. It works as an extension to your in-house team for a dedicated project. It works on a daily basis with your team, sharing their work progress. This is a solution-based model where you are relieved of a hands-on approach, as the outsourcing service provider takes significant responsibilities in relation to training, managing and productivity of the resources. This model is more suitable for roles where the skill-set requirements are technical in nature and is a time-bound process. (example: compliance work, finalisation of accounts etc.)

The company has complete control over the project and its work. On the other hand, the dedicated team offers tangible results based on the goals and requisitions decided upon.

The model works better for long-term projects as the project scope is not rigidly defined and can change. It is highly recommended for small and medium businesses that focus on delivering results rather than recruitment and training involved in an in-house team.

Project-based Model or Job-by-Job outsourcing

The project-based outsourcing model helps to delegate the project’s entire development and management work to the hands of a reliable outsourcing partner. The outsourcing company works as a partner to the client. You draft a planned strategy of how deliverables will be checked and approved.

The model allows you to delegate your work as a project on a job-by-job basis to your outsourcing partner. This model gives you additional processing ability during the seasonal rush or when you have a lot of work and deadlines are close when your current setup may not be handle the load. In this model, the jobs are scoped upfront and billed per job.

Conclusion

As a small and medium business, you have several options to grow and reach your objectives. Choosing the right outsourcing model is important and avoid paying more or not getting the desired results. Hence, choosing the right model requires an understanding of your objectives and business requirements to better position to achieve the desired results.

Your friendly team at AccSource can help you choose a suitable model and customise it to suit your small or medium business. Contact us for a free consultation and explore the models that can be customised to suit your business requirements.