We are living in a gig economy - and that is good news for fast-growing companies that want to tap into on-demand, cost-effective talent.
There is a tipping point, however, where a business’ growth can no longer be supported by ad-hoc freelancers. For tech startups, this is often coupled with other key milestones like an injection of capital, proof of platform concept, or challenges like scaling at the pace of customer demand. It is at this point when many startups start exploring more long-term, scalable solutions like Remote Teams or Outsourcing.
So, how do these two options stack up, and which is a better fit for your organization? Let’s dive in.
Remote staffing and outsourcing: what's the difference?
Outsourced service providers are typically contracted to deliver a particular outcome or number of hours. The relationship is usually managed through a single point of contact under an account-based model.
On the other hand, remote staff members are an extension of your existing team, and are integrated into your company culture and processes.
Remote teams are especially useful if you’re looking into externalizing repetitive work such as data entry, reporting, customer support, data transcription, or data curation for machine learning. Once up and running, remote teams are typically managed by you, as an extension of your in-office team.
How do remote teams compare to outsourced service provider arrangements?
1. Remote teams offer more cost flexibility, while outsourced teams can have a lower bottom line.
- Remote teams offer the reliability of an in-house team, without the high costs. Remote teams fit into your company culture and structure. Because of this, they provide your organization with the reliability of an established team, without the overheads associated with full-time employees.
- Remote teams are easily scalable. This solution is particularly cost-effective for start-ups looking to grow quickly. Remote team providers, like Bolton Remote, manage a talent portal that provides on-demand access to pre-screened candidates, ready to be interviewed and hired at a moment’s notice.
- Outsourcing can mean lower costs per project, but with a controlled output. With outsourcing, you’re typically paying for the completion of a project, on a pre-agreed outcome basis. While this could mean lower project costs, it can be difficult to modify or alter the scope of the pre-agreed outcome as is often the case for fast-growing companies.
- Outsourced providers may appear to be easy to manage, but could rack up additional costs. With outsourcing, your organization can expect to experience a hands-off approach to the management of the team who actually do the work. Although this seems like it would pay off in the long run, it can manifest future risks. Research shows that while outsourcing can be cheaper at the outset, you can rack up an additional 14% to 60% in hidden costs, whether it’s from the cost of poor work quality to the cost of unplanned risks or lost time in coordination.
2. Level of control varies between remote teams and outsourced service providers
- Remote teams allow for increased control over processes and communication. Although they aren’t physically in your office, your remote team is part of your organization, much like full-time employees. Because of this, companies can better manage outcomes driven by working processes, working hours, and a team mindset.
- Outsourced teams are purely there to do the job. As you’re engaging an outsourced service provider to get the job done, you have less say over what hours they work, as well as the processes they use. This isn’t necessarily a bad thing however, as you will have more time available to focus on your higher tiered tasks.
3. Remote teams and outsourced employees can both shift company culture
- Remote teams can help you maintain and develop your company culture. A remote team is exactly that: a part of your team. This means that they live and breathe your company values, just like your full-time employees do, which can lead to enhanced brand image and stronger brand identity - all of which are crucial in retaining clients and are good for talent recruitment and retention.
- Outsourcing may dilute company culture. As outsourced service providers are engaged for the job, not for cultural fit, they aren’t integrated into your team in the same way. This can go one of two ways. In some cases, this can either lead to a dilution of company culture or, it can allow management to spend more time with their employees, thus developing collaborations and workplace culture.
4. Recruitment of remote teams gives you full control over your team, however, outsourcing is out of your hands.
- Remote team providers give you full control. Providers work with you to find suitable candidates for your team. Once you have selected your new team, remote team providers not only manage the job offer and hiring process but also, tailor the package to be in line with the local market ensuring you can attract and retain the best talent for your team. Once these steps are complete, you are given full control of your team.
- Outsourced teams will get your work done on time, but you won’t have control over who works on your team. Outsourced service providers have one goal: to finish the pre-arranged outcome in the set amount of time given. Although your work will typically be completed on time, you won’t have control on who works on your projects or account - meaning processes can be changed and human error can become more of a possibility.
Over to you
If your organization has reached a critical juncture where freelancers can no longer support your growth, outsourcing and remote teams are both good options to explore. Knowing the key differences between these services can undoubtedly affect your organization's productivity and profitability. In sum, the key distinction between the two is that remote teams can be aligned specifically to strategic business imperatives or outcomes, while outsourcing is simply transactional.
If you’re ready to explore the benefits of a remote team, take a look at how other businesses are using remote staffing to scale.
