outsourcing business model
What is the best outsourcing model for start-up?
Each implementation needs to scale operations, especially in the development, at some point in time. However, face many challenges, such as
1. Availability of the necessary skill set to the geography local construction of the R & D. right
2. The high costs of hiring people with experience you want. The additional costs in administration benefits and, in general, having a long-term liability, while the company still has to prove itself.
3. The additional funding requirement to expand infrastructure to match the expansion of the team.
4. Founder of the management to get flooded with operational issues due to their enlarged, while the equipment they need to concentrate more on customer acquisition technology, fundraising and new.
What are the options available to a start-up out of this predicament and manage growth without investing significant $ $ s? Outsourcing to an offshore location is a viable option because there are geographical areas, such as India and China where labor talent is available at a cost relatively low.
Outsourcing sounds simple, but may not be easy to execute. The standard models of outsourcing present their own challenges to implementation. Let's look at the available options:
1) The time and material contract basis: The offshore company provides a team of duration and fixed rates on a MM. While this model is good for established firms outsourcing peripheral events, for a start-up of the problems they face are:
a) Your intellectual property is shared with the engineers who stay with you for a long time. Once the T & M contract is done, there is no guarantee that the same team will be available for you to work longer.
b) The foreign partner, possibly rotate among engineers of different customers based on their business needs. Engineers residual carry with them their IP when they move to the next project, which could be one of its competitors.
c) Offshore partners tend to have high rate of attrition. You can lose critical resources midway in the project.
d) At the start, your goal is to build a strong development team that stays with you for a long period of time, constant improvement of intellectual property rights created. This objective is not met by T & M contracts
2) fixed-price contract: You define a relationship of work (SOW) and the foreign partner to run the same inclusive price. Again the model works for businesses can be established that a clear, unequivocal SM and then invite bids from several partners. Failure by the establishment of enterprises for the following reason:
a) New businesses have to work in a reactive mode in the early years. A fundamental requirement that the client must first have a higher priority of the road map to long term. Therefore, it's impossible to carve a pig in the concrete and use thereof for the award of fixed price contracts
projects b) As above T & M is taking a very high risk of exposure from their intellectual property to employees of the foreign partner. Remember that your intellectual property rights is perhaps the only difference in the early years of starting.
c) Establishment of a pig is not a trivial task. Editorial takes some time and has to be quite complete so there are no holes in the services arrive. The implementation of the management must spend a lot of effort in making HM. This is really not-so-productive work for the founder of a start-up, and that is neither conducive to the acquisition of new customers or raising additional funds, The two most important activities required to make a launch to sustain the early years.
d) More often than desired, benefits a fixed price contract not match the expectations of customers. There are always some gaps and mainly due to differences in understanding and change, even minor importance in the specifications. You, as a start-up can not afford that to happen, so that the time to market is critical.
What are your options? You want to outsource, but it's the best business model to adopt. Recently, a new model has evolved a Build-Operate-Transfer (BOT) model. The BOT model is truly made for the creation of firms rather than the established players. That's how it works:
1) building a team dedicated Offshore Partner 100% of qualified engineers as per the implementation requirement. Please note that the team is selected from an existing pool of resources, but usually "hired fresh "for the launch of work. Each candidate is prescreened by the implementation of management. The team size is usually 4-8 people, but could more.
2) The foreign partner operates this equipment for a designated, pre-agreed period. Basically, the foreign partner will provide complete infrastructure, administration, human resources, payroll and other benefits for the team, while obtaining addresses of the founders in the final implementation. Thus basically, you get a 100% dedicated "virtual" team got to you in an offshore location.
3) The partner of the sea move equipment to creating their own businesses, such as offshore entity that it provides the funding to expand. The sea provides domestic partner settings direct operation of its customer (Govt. of liquidation, etc.) and then moves the development team to this new set.
The BOT model clearly meets the "pre-requisites outsourcing "to the beginning. Just to summarize:
– Your intellectual property remains with you at all times. It is shared only with employees who are on his payroll indirectly, first and directly at a later point of time.
– You have a team of fully functional high seas but do not take any responsibility for the long term. You do not spend capital expenditure in the construction of infrastructure, etc.
– No need to waste precious time in building plant or detailed specifications. Since the offshore team is functionally report to you, you can decide on priorities to their business needs.
– As founder, save precious time to not clogged by the administrator, human resources or payroll issues. Your offshore partner takes care of that. You only focus on proving its business model and be successful.
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