Business Process Outsourcing vs Staff Hosting

“Outsourcing” is often used as an umbrella term for local businesses benefiting from overseas labor. However, within this broad term, there are two main models: business process outsourcing & staff hosting (also called staff augmentation). These two models could have either offshore or nearshore operations, or of course a combination of both. Alright so that’s a whole lot of buzzwords! Let’s start by defining them.

What is Business Process Outsourcing?

Business process outsourcing, or BPO for short, is the use of third-party vendors to take over certain parts of a business’ operations. For example: an American social media company doesn’t necessarily have in-house specialists for every one of their many business processes, so they may outsource content moderation, for example, to a BPO. The key point is that the entirety of a business process or a department is shipped out to a different organization with its own mission, identity & expertise.

What is Staff Hosting (Staff Augmentation)?

In contrast to process outsourcing, staff augmentation is pretty much providing additional overseas staff to a business. These added global employees are integrated into the local business’ teams, as opposed to existing as a separate 3^rd party entity that delivers a final product. Staff hosting is a specific model of staff augmentation in which the vendor providing additional staff takes care of housing, equipping, & paying these employees. Housing here refers to office space for work, of course. This is Relay Human Cloud’s service in a nutshell. Relay has offices in India, Mexico & Honduras full of talented professionals with a wide array of expertise. Relay’s clients select from this pool of available talent & find the staff that best fit their organization’s needs & culture, while Relay handles all the hassle typically associated with hiring, such as payroll, benefits, legal compliance etc. The result for Relay’s clients is the ability to onboard highly qualified overseas professionals in minutes, saving themselves an incredible amount of time and money.

What Does Offshore Mean?

Within the context of outsourcing and staff hosting, “offshore” refers to overseas operations far from home. For American businesses, this typically refers to labor in India, China, the Philippines, Poland or Ukraine.

What Does Nearshore Mean?

Within the same context, nearshore refers to overseas operations close to home, typically around the same time zone. The purpose of nearshoring is to source cheaper skilled labor, while maintaining their ability to work with homegrown teams and/or customers during regular hours of operation. For American businesses, this typically refers to labor in Mexico, Honduras, Uruguay, Brazil, or other countries in North, Central or South America.

Comparison

There certainly are use cases for shipping out entire departments or processes to another company, particularly for large businesses (i.e a massive tech company outsourcing their inbound calls rather than running an expensive call center in Silicon Valley). However, most organizations would benefit from the flexibility & control that staff augmentation offers. Let’s explore 6 detailed reasons why staff hosting services such as Relay Human Cloud’s can be a better formula for growth than business process outsourcing.

Staff Selection

A business process outsourcer typically hires the entirety of the staff dedicated to their client’s outsourced process, including the core team, auditors, trainers, HR, front line managers, operations managers, AVP’s, etc. And yes, the chain of command withing a single BPO vendor account does typically go that high. The client who hired this BPO has little to no visibility on the dozens, hundreds or even thousands of employees who will fulfill the process they’re outsourcing. In contrast, a staff hosting company such as Relay allows you to interview pre-hired, qualified talent until you find the perfect fit for your organization. The level of customization offered by the staff hosting model is unparalleled in the world of outsourcing.

Transparency

We’ve already covered how BPO companies are separate entities from the businesses that hire them, but we haven’t fully explored the downstream effects of this separation. Evidently, an organization that hires a BPO company will create some sort of reporting structure, typically weekly or bi-weekly meetings to touch base with their vendor. Being a separate entity, this BPO is incentivized to make itself look good in these meetings, and is therefore likely to skew, embellish, obscure, or otherwise temper with metrics, with its own interests at heart. This is hardly an indictment of any business’ character; it’s just the reality of a highly competitive private sector. In contrast, the staff hosting model doesn’t give vendors an opportunity to rewrite the facts. A staff hosting company such as Relay provides your teams with additional human resources who are directly accountable to you because you communicate with them daily, and you have full visibility over their activities within your organization’s systems. Staff hosting stands out as the most transparent way for any business to expand its workforce globally.

Company Culture

In addition to staff selection and transparency, another downstream effect of BPO companies being separate from their clients is disparities in company culture. What do we mean by that specifically? Well let’s consider an American social media company that makes user privacy a top priority. When they outsource content moderation, for example, to a BPO, is this priority fully outsourced as well? Does the BPO have stress the importance of privacy in every interview or onboarding class to the same extent as their client? Does the BPO stress this priority in internal emails/messages as often as their client? Does the BPO have as many privacy-themed posters in their offices as their client? Does the BPO live and breathe privacy to the same extent as their client? Ultimately, different organizations have different customs & priorities, which could lead to disagreements & misunderstandings. In stark contrast, a staff hosting company such as Relay provides adaptable professionals who are fully immersed in the organization they’re augmenting, meshing seamlessly into their culture & processes.

Communication

One more ripple effect of BPO’s and their clients being separate organizations is the limitations this imposes on communication. Now obviously BPOs do stay in touch with their clients through formal regular meetings, and ongoing contact between senior stakeholders on either end. But there’s no getting around the fact that the BPO and their client are in separate silos, and most of information shared within their organizations don’t trickle over to the other. In fact, sometimes there is more incentive for secrecy than transparency. For example, the client may withhold information that they deem proprietary, or the BPO may obscure some difficulties they’re experiencing so that they don’t lose their client’s confidence. Now in staff hosting, the complete opposite is true. A staff hosting service such as Relay gives businesses teammates that they interact with daily, even hourly, allowing insights, feedback, and all sorts of information to flow seamlessly. Say goodbye to silos & secrecy! Relay’s remote talent are equipped with state-of-the-art equipment and software to stay in touch with their clients’ teams & put their best foot forward on those organizations’ systems.

Cost & Scalability

Another big difference between business process outsourcers & staff augmenters is how they charge their customers. BPO’s often iron out hefty, long-term contracts with their customers, accounting for large headcounts & guaranteeing several months, if not years, of business for themselves. This model definitely has its use cases but may not be ideal for everyone, especially small to medium businesses. Staff augmenters have a lot more wiggle room to be more flexible. For example, Relay charges a flat monthly fee for each resource hired by their customers and allows customers to easily cancel/downsize for the upcoming month. Coupled with the ability to hire additional resources at any time, the result is a high level of scalability that allows customers to quickly adapt to their business needs.

Wrap-Up

It’s no secret that outsourcing, whether through a BPO or a staff-augmenter, is a beneficial tool for local businesses. While outsourcing an entire process or department to a separate company has its appeal, the overall flexibility, customization & transparency offered through staff-augmenting just makes a lot more sense for most businesses. Relay Human Cloud’s particular model of augmenting has the added benefit of de-risking the entire hiring process for its customers because Relay handles all the hassle typically associated with maintaining an employee. By taking care of recruiting, payroll, equipment, office space, benefits, taxes & compliance, Relay allows their customers to focus solely on onboarding new team members & scaling their overseas team dynamically. Learn more here.