Based on the current process of startups and SMEs, there is a need to rely on external service organisations or the third parties. It is what we commonly know as outsource. The purpose of outsourcing itself is to speed up task or project that is challenging to develop. More often than not, projects get delayed as the nature of each task demands a different expertise, availability of the personnel and cost of hiring new team members with a limited budget.
Upon deciding for outsourcing, new challenges pop up. Questions like,” What kind of outsourcing model that will give us the benefit in efficiency and costs?”, “How do we manage projects if we are relying on an external team we barely know?”, “Can I trust them?”
“Can I trust them?”
Trust is the main issue in outsourcing, yet is not impossible to solve. So let’s get a dive into models of outsourcing and who knows we can help you to solve it.
There are 3 popular outsourcing models which rest on geographical concepts, location of the service providers and the relationship between their customers.
Here, we’ll break down the pros and cons of each outsourcing model:
1. Offshore outsourcing
Offshore outsourcing allows external organisations to perform business and development in countries that might be two or three continents away from where the products or services are actually developed or manufactured. For example, a US company producing a website with a team of developers in India. The cost of this model, although seems as the lowest, comes with several issues to consider, such as a constrasting timezone, cultural challenges, miscommunication, lack of transparency, hidden costs, reduced liability, ownership and data privacy.
2. Nearshore outsourcing
Nearshore outsourcing aims to solve the problems of Offshoring model. Third parties or external organisations are located within an acceptable geographical distance that allows a company and third parties to communicate easily while sharing similar timezone and overall sense of control and managed risk. Onsite visits happen faster and more frequently. Challenges of this concept, however, is the cost of hiring- which might be higher than Offshoring outsourcing. Not to mention the cost to travel and commuting added to company’s bill, plus limited pool of talents and transparency issues which makes a major block to think about.
3. Onshore outsourcing
Onshore outsourcing is the easiest, fuss free model which solves the problems of offshore and nearshore methods. It has the lowest risk where the third party is located in the same country or city, allowing both parties to establish a relationship with full liability and trust. It makes real-time collaboration possible while sharing the same law and jurisdiction- a benefit for startups and SMEs that require a high level of involvement in projects and tasks.
Developing IT projects with limited resources is always a challenge in startups and SMEs. In LEVR, we aim to tackle that challenge in Startups and SMEs in Singapore. We offer Onshore outsourcing, a team to work with you onsite with an extended resources around the globe. We tailor the cost with a flexible contract that suits your business needs.
