Business Process Outsourcing vs. Staff Augmentation
In today’s globalized market, many companies leverage a combination of staffing models to boost productivity and efficiency. While global teams were once a luxury, they have now become an essential aspect of staying competitive. Two prominent models that connect businesses with global talent are Business Process Outsourcing (BPO) and Staff Augmentation. Although both models involve external teams, they differ in execution and provide varying levels of control, flexibility, and cost-effectiveness.
Business Process Outsourcing (BPO)
BPO involves contracting out entire business functions to external providers. In this setup, the vendor manages the task as an independent operation, offering the client limited control over the workforce and day-to-day operations. The provider handles the recruitment and management of the team, leaving the client with minimal visibility into the daily processes or staff involved.
BPO is often a practical solution for larger companies aiming to cut costs or scale operations in areas where they lack expertise or resources. For example, outsourcing call center operations can help a company avoid the expense of maintaining an internal team. However, while BPO can be cost-effective, it may reduce flexibility and direct control, and communication challenges may arise due to the physical and operational distance between the client and vendor.
Staff Augmentation
In contrast, staff augmentation focuses on supplementing a company’s existing team with skilled professionals, rather than outsourcing entire functions. These external staff members become part of the client’s team, working under their direction with full transparency and accountability. Staff augmentation providers not only supply the talent but also manage the infrastructure and administrative support needed for the staff, including payroll, benefits, office space, taxes, and legal compliance.
Staff Augmentation vs. BPO: Key Comparisons
There are several reasons why staff augmentation may be a better fit for many businesses compared to traditional BPO:
- Staff Selection: In BPO arrangements, the vendor oversees the recruitment and management of the team, leaving the client with limited control over who is hired. In contrast, staff augmentation allows companies to choose from a pool of pre-vetted professionals and select individuals who align with their needs and culture.
- Transparency: BPO vendors operate as separate entities, which can result in reduced transparency in team performance. Vendors may prioritize their own metrics and potentially obscure or misrepresent results. Staff augmentation, however, integrates external staff directly into the client’s organization, offering complete visibility and accountability.
- Company Culture: Teams provided through BPO typically operate independently from the client’s organization, which can lead to a disconnect with company culture and values. This misalignment can affect work quality and project priorities. Staff augmentation embeds external staff within the client’s team, enabling them to work closely with in-house employees and align with the company’s culture and objectives.
- Communication: The operational gap between BPO vendors and clients can lead to communication hurdles, such as delays in real-time updates and challenges in sharing information. Staff augmentation ensures smoother communication, as the external team is integrated into the client’s workflows and systems.
- Cost and Scalability: BPO contracts often come with long-term commitments and significant upfront investments, which can be a disadvantage for smaller businesses or those with varying staffing needs. Staff augmentation is more adaptable, allowing companies to hire additional resources on a month-to-month basis and scale their teams as business demands shift.
Deciding Between Staff Augmentation and BPO
Extended teams, whether through BPO or through staff augmentation like Relay Human Cloud, can offer significant benefits to businesses seeking to expand their capabilities while managing costs. However, staff augmentation typically provides more flexibility, control, and transparency for most organizations. Relay Human Cloud‘s staff augmentation model simplifies the process of hiring overseas talent and handling administrative complexities. This allows businesses to focus on growth and have confidence that they have the right people in the right roles to support their success.