3 Outsourcing Models to Consider for Your Business

On August 29, 2012, in Outsourcing, by Business Development Group
With outsourcing becoming a mainstream business strategy, most companies usually go for the third party outsourcing model. However, for those companies that started out with the captive model and later moved on to either the third party outsourcing model or the hybrid outsourcing model have found the transition less complex.

With outsourcing becoming a mainstream business strategy, most companies usually go for the third party outsourcing model. However, for those companies that started out with the captive model and later moved on to either the third party outsourcing model or the hybrid outsourcing model have found the transition less complex.

For a company considering to outsource business functions, there are actually several business outsourcing model to consider. In his article “Captive or Third Party BPO or Hybrid – Which is right for your business?” Mark Atterby of The Sauce outlined the characteristics of each business outsourcing model.

The Captive Outsourcing Model

A “captive” is a wholly-owned subsidiary established by an organization or enterprise “to perform services for all corporate affiliates and divisions.” A captive may be established locally or in low cost offshore locations like the Philippines and other Asian countries.

The article said of the captive model’s benefits: “Captive outsourcing offers greater flexibility in terms of controlling its workforce, according to Hans Kriniger from Intellias. Multi-national enterprises may use a number of captives to offer follow a sun type of operations and services. When the captive in one time zone closes down the next one is firing up for the day.”

Related Article: The Basics of Virtual Captives

The Third-Party Outsourcing Model

This model is highly popular and is commonly associated with offshore outsourcing. This is when a company outsources certain business processes to a third party vendor or an outsourcing service provider, usually in offshore locations.

The benefits of this model include: enhanced visibility of costs that are usually hidden in the captive outsourcing model, being able to increase global reach and utilize global best practices from vendors or outsourcing service providers.

Related Article: Extending the Business Value of Outsourcing

The Hybrid or Virtual Captive Outsourcing Model

In his article, “The Evolution of Captive and Outsourced delivery models for business processes: what is the right option for your company?” Graham Russell said: “For those companies not quite sure about outsourcing, hybrid or “virtual captive” models have been developed by outsourcing providers, allowing for a middle ground which selects benefits from both models.”

The hybrid or virtual captive outsourcing model offers the benefits of both the captive and the third party outsourcing models. In this model, the enterprise can utilize the facilities and expertise of the outsourcing service provider while retaining control over the offshore outsourcing operation.

Related Article: The Evolution of Captive and Outsourced delivery models for business processes: what is the right option for your company?

With outsourcing becoming a mainstream business strategy, most companies usually go for the third party outsourcing model. However, for those companies that started out with the captive model and later moved on to either the third party outsourcing model or the hybrid outsourcing model have found the transition less complex.

Related Article: Captive or Third Party BPO or Hybrid – Which is right for your business?

 

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