The Different Types and Models of Outsourcing

Summary

This video from 'Outsourcing Matters' explores various outsourcing models, including onshore, nearshore, and offshore, which refer to the location of service providers. It clarifies misconceptions about outsourcing and highlights its benefits like cost savings and access to a global talent pool. The video also discusses operational models such as self-augmentation, managed team, and project-based outsourcing, emphasizing the different levels of client involvement and the nature of work. It advises businesses to choose the model that best fits their processes for optimal results.

Takeaways

• 🌐 Outsourcing offers various options, including onshore, nearshore, and offshore models, which can be confusing for businesses.
• 🏢 Onshoring involves hiring a service provider within the same country, which is convenient but typically more expensive.
• 🌍 Nearshoring is outsourcing to a neighboring country, often sharing the same time zone and potentially offering cost benefits.
• 🚀 Offshoring refers to delegating tasks to a company in a distant country, which can significantly reduce staffing costs.
• 💼 Offshore staffing is a popular practice among major industry players, offering access to a global talent pool of over 8 billion.
• 🔧 There are three operational models in outsourcing: self-augmentation, managed team, and project-based model, each with different levels of client involvement.
• 👥 Self-augmentation is similar to traditional employment, with the client managing the day-to-day activities of the outsourced staff.
• 🤝 In the managed team model, the client and service provider share responsibilities, with the provider offering strategic input and operational oversight.
• 📈 Project-based outsourcing is for limited-time requirements and is typically managed entirely by the service provider, akin to an agency model.
• 🚀 Outsourcing can provide significant resources to help businesses scale and grow, emphasizing the importance of choosing the right model to complement business processes.

Q & A

What are the three main types of outsourcing locations mentioned in the video?

The three main types of outsourcing locations are onshore, nearshore, and offshore.

What is the primary difference between onshoring and offshoring?

Onshoring involves outsourcing to a domestic company within the same country, while offshoring involves outsourcing to a foreign company.

Why might a company choose onshoring over offshoring?

A company might choose onshoring to avoid issues with time zones, language, or cultural differences, despite it typically being more expensive.

What are the potential benefits of offshore staffing mentioned in the video?

Offshore staffing can save up to 70% of staffing costs and provides access to a global workforce of highly qualified staff.

What is the main difference between the self-augmentation model and the managed team model in outsourcing?

In the self-augmentation model, the client manages the day-to-day activities of the staff directly, while in the managed team model, the outsourcing firm provides more strategic input and operational oversight.

How does project-based outsourcing differ from the other operational models discussed?

Project-based outsourcing is for limited-time requirements and is typically managed in full by the service provider, unlike the ongoing nature of self-augmentation and managed team models.

What is the role of the client in a managed team model?

In a managed team model, the client is less involved with individual staff and day-to-day activities, focusing more on the higher-level direction of deliverables.

Why is it important for a business to choose the right outsourcing model?

Choosing the right outsourcing model is crucial for businesses to ensure that it complements their processes and helps them achieve the best possible results.

What are some operational models in outsourcing that are discussed in the video?

The video discusses three operational models: self-augmentation, managed team, and project-based model.

How does the nature of work carried out differ between the outsourcing models?

The nature of work varies based on the level of client involvement and the duration of the work, with self-augmentation being more long-term and project-based outsourcing being time-limited.

What is the significance of understanding different outsourcing models for a business?

Understanding different outsourcing models helps businesses to integrate outsourcing successfully into their operations, leveraging the benefits of each model to enhance their business strategies.