BPO vs. BOT vs. seat leasing vs. staff leasing

Seat leasing vs. staff leasing vs. BPO vs. BOT

Understanding Pricing, Labor Costs, and Internal Revenues

It is important for businesses to choose the right outsourcing model if they want better control over their budget and costs as well as their return on investment.

In outsourcing, business processes can be classified as either staff leasing, seat leasing, comprehensive business process outsourcing, or B-O-T, or Build-Operate-Transfer.

Staff leasing - what is it?

Employee recruitment is outsourced through staff leasing, an outsourcing model where a leasing company or PEO (Professional Employer Organization) contracts for employee recruitment. Companies that want to hire in-house and remote workers with fewer risks and resources will find this most useful.

Clients can select the team members, but the service provider will manage the entire hiring process. The third-party company handles administrative and human resource tasks.

Staff leasing: advantages and risks

Staff leasing offers several benefits to companies.

• Employers can share the risks of handling employee benefits and compliances with their service providers instead of having to handle them alone.
• Whether local or remote, employers will have access to highly qualified talent. Their service providers have years of experience in the fields they provide.
• With staff leasing services, employees benefit from better benefits and incentives for the duration of their employment.

In addition, staff leasing also brings risks to businesses, especially when it comes to controlling employees. Since the business shares staff management with their service provider, all aspects of controlling employees should be handled by their service provider.

Since companies could become dependent on staff leasing, this also affects their mindsets.

Seat leasing - what is it?

Alternatively, seat leasing focuses on leasing an infrastructure or a fully functional and well-equipped office. Seat leasing is an option for businesses with small teams, but do not want to take on the huge expense of building an office.

Seat leasing services are divided into two categories: cold seats and warm seats. Cold seats include essential office equipment like computers, internet connections, furniture, and other essentials.

In contrast, warm seat leasing allows you to hire additional staff for a variety of functions, including accounting and administration.

Seat leasing: advantages and risks

Seat leasing is one of the most common forms of outsourcing in several countries, including India and the Philippines.

A 2017 study in the United Kingdom indicates that companies are overpaying for workspaces for employees because of their hidden costs. Seat leasing is cheaper than renting out office space alone. Providing tools and equipment for them is included in this expense.

For their employees, seat leasing means only paying monthly premiums for a fully furnished office space.

The downside of seat leasing is that most offices have common pantries and utilities. While meeting other employees from different companies can be beneficial, some clients might not be comfortable with this arrangement.

It also makes it difficult to reserve conference rooms, breakout areas, and other company facilities for private use.

How does business process outsourcing (BPO) work?

Having an agreement and relationship with an external service provider like ConnectOS is what constitutes comprehensive business process outsourcing. It is the provider's responsibility to handle business functions such as administration, content, delivery, and technology.

The three types of business process outsourcing are onshoring, nearshoring, and offshoring. Onshoring involves hiring a local service provider to handle back- and front-office tasks.

The only difference between nearshoring and offshoring is their location, because nearshoring involves tapping into nearby countries.

Outsourcing of business processes: advantages and risks

Outsourcing has the following benefits for companies.

• By managing an operation, clients can save up to 70% on costs and maximize profitability.
• When outsourcing a service, they won't struggle to find high-quality, suitable employees for their companies.
• With offshore and nearshore teams, companies can tap into new markets more easily since they can learn about their characteristics.

On the other hand, business process outsourcing poses several risks to them as well. Onshoring maintains their 'local touch' and identity, but provides fewer savings and incentives.

Nevertheless, nearshoring and offshoring pose risks to data security and intellectual property. For instance, in offshoring, companies and service providers still find ways to increase their security and protect themselves from breaches.

BOT stands for build-operate-transfer. What does it mean?

A build-operate-transfer (BOT) is where a business creates a partnership with an offshore agency or business to build and operate the business.

The company will build the business infrastructure from scratch, including personnel, office space, licenses, and all essentials. At a later date, once everything is ready, the business will be transferred to the owner.

When outsourcing, clients usually start by leasing staff or seats, which they will transfer once they are ready to handle the team themselves.

When outsourcing software development and IT services, India tends to use build-own-operate-transfer (BOOT) more than other countries.

BOT advantages and risks

The outsourcing partner can share their knowledge and expertise in building an operation. This will be very helpful for small businesses considering offshore operations for the first time.

Since their service providers manage their functions first, companies can have lower building and operation risks.

Once a team is absorbed, employees are now covered by the company's long-term retention program. This is not ideal for dynamic teams that may need to be scaled down based on demand.

When companies decide to transfer operations to their company, they should be prepared for tedious paperwork and higher charges.

Understanding pricing, labor costs, and internal revenues

Businesses and companies outsource parts of their business processes to save costs and expenses while increasing sales at the same time.

It is important to specify what functions you want to outsource and what quality of output you expect before outsourcing a business function.

By calculating the in-house costs of a business function you wish to outsource, you can verify how much you are about to save as compared with doing it in-house.

You can calculate your total savings by subtracting outsourcing costs from in-house costs.