Business Process Outsourcing vs Staff Augmentation
In today’s globalized economy, many companies use blended staffing models for productivity and efficiency. Global teams were a luxury a few decades ago, but in today’s competitive market, they’re all but a necessity. There are various models that aim to connect businesses with global teams, including Business Process Outsourcing (BPO) and Staff Augmentation. While both models leverage extended teams, they operate differently and offer varying levels of control, flexibility, and cost-efficiency.
Business Process Outsourcing (BPO)
BPO is sending entire business functions to external vendors. The outsourced service is handled by the vendor as an independent entity, meaning the client company has limited control over the staff and operations within the outsourced process. The vendor typically hires and manages the entire team, and the client has little visibility into the daily activities or staff involved in the process.
BPO can be beneficial for large organizations that need to reduce costs or scale operations in areas where they don’t have the expertise or resources. For example, a large company might outsource its call center operations to avoid the expense of running an in-house team. However, while BPO can be cost-effective, it often involves a loss of flexibility and direct control, as well as potential communication barriers due to the physical separation between the client and vendor.
Staff Augmentation
In contrast to BPO, staff augmentation focuses on providing additional, qualified staff to a company, rather than outsourcing entire processes. With staff augmentation, the external workers are integrated into the client company’s teams and work under its direction, with full visibility and accountability. The key difference is that staff augmentation companies provide not just the talent but also the infrastructure and support required to manage the staff. This includes handling payroll, benefits, office space, taxes, and legal compliance.
Staff Augmentation vs. BPO: A Comparison
There are several reasons why staff augmentation might be a better option for many businesses compared to traditional BPO:
- Staff Selection: BPO companies hire and manage the entire team for an outsourced function, giving the client little to no control over the recruitment process. In contrast, with staff augmentation, businesses can select from a pool of pre-vetted talent and choose individuals who best fit their needs and culture.
- Transparency: Since BPO vendors operate as separate entities, there can be a lack of transparency in how the outsourced team performs. BPO vendors may prioritize their own interests and obscure or misrepresent performance metrics. Staff augmentation, however, integrates additional staff into the client’s organization, offering full visibility into their work and accountability.
- Company Culture: When outsourcing a process to a BPO, the external team might not align with the client company’s culture and values. This can lead to discrepancies in work quality and priorities. With staff augmentation, external professionals are integrated into the company’s team, working alongside in-house employees and aligning with the company’s culture.
- Communication: The separation between BPO vendors and their clients often results in communication barriers, such as lack of real-time updates or difficulty sharing information between teams. Staff augmentation allows for seamless communication, as external staff are integrated into the client’s workflows and systems.
- Cost and Scalability: BPO contracts are often long-term and require significant upfront commitments. This can be a disadvantage for smaller businesses or those with fluctuating staffing needs. Staff augmentation is more flexible, offering clients the ability to hire resources on a monthly basis and easily scale up or down as business demands change.
Deciding Between Staff Augmentation and BPO
Outsourcing, whether through BPO or through staff augmentation, offers significant benefits to businesses looking to expand their capabilities and reduce costs. However, for most companies, staff augmentation provides greater flexibility, control, and transparency. Relay Human Cloud enhances the staff augmentation model by offering businesses a simple, hassle-free solution for hiring overseas talent, while managing all the administrative complexities. This allows companies to focus on growth, knowing they have the right people, in the right roles, ready to contribute to their success.