7 Outsourcing Flavours You Need to Know About Part 2.
This article discusses the 4 different business models used by outsourcing companies. Each of these has distinct advantages and risks. Which one is right for your next project? Read on and find out!
This is the second article in a 2 part series. You can find Part 1. The ‘3 Flavours of Freelancers’ here. It discusses the features and risks associated with the different types of freelancer.
Part 2. The 4 Flavours of Outsource Service Providers
So much choice... Does it really matter?
This article discusses outsource companies, as opposed to individual freelancers. Hiring a company to do your work can offer some significant advantages over a freelancer, but it does come at a cost.
Outsource Service Providers- General Information
Before we dive into their respective models, here are some of the general pros and cons of using a service provider/company instead of a freelancer.
Pros
- May apply more rigorous development and project management systems to the work, lowering the risk of failure
- May be able to offer a range of professionals. Diversity of skills allows for multiple tasks to be carried out simultaneously
- Scalability, can often add more people or remove people at short notice
- May appoint project managers or project leads to manage the team for you. This gives you a single point of contact and a single point of accountability if something goes wrong
- Can ‘crank out’ large quantities of work in very short period of time. The easiest way to get bigger projects done FAST!
- In-house infrastructure such as hosting/development environments can reduce your costs in the short term
Cons
- Less visibility of work (you’re likely to have groups of people doing your work, without knowing who they are or their skill sets)
- A greater tendency to ‘black box’ work. That is, hide the work from you until it is ‘finished’ in their opinion, and then ambush you to signoff on the project on the due date
- Can have trouble with communicating requirements because of ‘Chinese whispers’. Often there is a single representative appointed to act as a go between, screening you from direct interaction with the people doing the work
- Some companies are skilled at extracting more money for less work. Particularly if they control development environments, you could find yourself held to ransom by an unscrupulous provider
- May get lower skilled labour assigned to your project, resulting in lower quality output (the classic bait and switch)
- Larger companies may be less committed to your success if they have a high volume of work. One bad review can be buried very quickly, and may be less expensive than fixing the project. Sucks if it’s your project they decide to cut their losses on
- Jack of all trades mentality. ‘We’re experts at everything’ attitude can result in generally poorer quality product, and many companies are reluctant to admit which areas they are stronger or weaker in
Where do they come from?
Online, Outsource Service Providers come from just about everywhere. Like freelancers, they tend to be predominately from developing nations; however unlike freelancers, a large proportion of providers have created ‘local’ presences particularly in the US and UK. There are also a lot of locally based companies that do the opposite to compete in this space. In addition to their local business operations, they create a business unit offshore and send work there to be completed at lower cost, whilst charging you a premium rate.
Below, we’ll discuss the 4 distinct models that I’ve come across are:
- Type 1: Standard Full Service Providers
- Type 2: Specialised Service Providers
- Type 3: White Label ‘Full Service’ Middlemen
- Type 4: White Label ‘Hands Off’ Middlemen Read the rest of this entry
