What is Onsite-Offshore Model?
By now, you probably know what offshoring is and that’s why it led you here. But have you heard about onsite-offshore model? It’s the latest disruptive business operation that emerged from the past few decades. Many business owners prefer it for its numerous advantages including the undeniable cost-effective impact.
Get to know more about onsite-offshore model as we discuss what it is about and detail how onsite and offshore models are combined.
Hybrid model: Onsite-offshore model
The onsite-offshore hybrid model is a combination of onsite and offshore models for delivering products or services. The vendor/provider and the client could be located in any place – they could be in the same city or in countries halfway across the globe from each other.
The tasks are assigned and shared between the onsite team and offshore team. The distribution of work will depend on the agreement between the provider and the client. In most situations, about 30% to 40% of the tasks are performed and completed by the onsite team while the remaining tasks are done by the offshore team. However, there are situations when the onsite team would do 60% to 70% of the tasks while the rest is done by the offshore team and vice-versa. There are other situations when the onsite and offshore teams would share the tasks 50/50 or equally.
The main benefits of the onsite-offshore hybrid model are maximizing the efficiency of costs and resources. Savings in labor and its associated costs and from infrastructure expenses are achieved because the offshore team is located in a lower-cost country.
Expertise and resources in the onsite and offshore teams are fully utilized if both teams are located in countries with different time zones. This means the smooth transition of tasks can be achieved online so that any unfinished work in the onsite team can be turned over to the offshore team and vice-versa. The onsite and offshore model is also beneficial for projects that are complicated and will run on a long-term basis, and for products and services that are high-tech and sophisticated. The client is also freed from the responsibility of handling a dedicated project team since the onsite team is administratively managed by the offshore services provider.
Let’s discuss some of the tasks performed by the onsite and offshore teams. Take note that any of these tasks may not be exclusively performed by one team alone since one of the main features of the onsite-offshore model is adjustability and flexibility of tasks. Both teams can exchange their tasks according to the needs and requirements of a project.
Listen to Episode 47 of the Startup Hustle Podcast – Offshoring, 10 Tips
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What is an onsite model?
Onsite means that outsourcing companies or third-party vendors provide employees to clients that hire the expertise and other services of those employees. Both the vendors and clients are located in the same country.
The vendor’s external or onsite team directly coordinates and works with the client’s team for task assignments. The vendor’s onsite team is usually located in the client’s office. But there are some cases of an onsite model wherein the external team is mostly located in the vendor’s office and the majority of their work with the client is done online.
An example of an onsite model is when the vendor’s main operations are located in San Francisco, California, while the client who hired the vendor is based in San Jose, California. The driving distance between San Francisco and San Jose is about 77 kilometers. If you travel by car with an average speed of 112 kilometers per hour, travel time between the two cities is about 45 minutes. In this setup, the vendor’s onsite team will stay in San Jose and report at the client’s office during the weekdays, and they go back to San Francisco during the weekends. Another option for the onsite team is to commute back and forth between the client and the vendor in the two cities every day.
The advantage of the onsite model is that it is well-suited for short-term projects. It is ideal for projects with repetitive and manually tedious routines, and for projects that do not have complete or specific requirements and specifications because they can change and evolve as the project goes on.
Tasks to be performed by an onsite team:
- Act as the connection between the client and the offshore team.
- Comprehend the requirements of the client and collect needed information that will be used by the offshore team for their development of the client’s product.
- Conduct interviews with the client and use the information from to interview for the initial planning and designing of the product development.
- Directly interact with the client to ask them if any adjustments need to be made to the project to prevent or reduce any last-minute revisions that may affect the schedule in the development and delivery of the product.
- Coordinate with the client to ensure the product is produced and delivered according to the client’s requirements and specifications.
- Adjust work schedules if applicable and necessary, according to the time zone of the offshore team.
What is an offshore model?
The offshore model or offshoring is the relocation of a company’s business process to a country that is not in the same geographical region. It can be done in two types – a company’s subsidiary in another country, or by a separate company providing offshoring services to a client. An example of the first type is the Ford Motor Company – a large American company that offshores some of its major business processes to India. This company has an IT subsidiary in India that handles all of its e-commerce and e-business solutions.
The second type is an offshore service provider hired by clients to provide them with offshoring services. This is very much suited for IT related services such as software development, web development, graphic design, content writing, and copywriting, digital marketing, and search engine optimization.
Offshoring’s main advantage is that it gives your company access to a large talent pool and resources at a much lower cost compared to the costs of labor and resources in the parent country. When you hire an offshoring service provider from countries with a lower cost of labor, you save on expenses related to health insurance or medical care, social security, taxes, worker’s compensation, and other costs related to in-house employees.
An offshore service provider reduces costs related to setting up a development or production center in an offshore country because the provider is equipped with all the basic functioning infrastructure such as office and production facilities, equipment, utilities, and other necessary physical infrastructure. Another advantage of offshoring is the streamlined transition of tasks and continuity of services between the local team and the offshore team.
Tasks to be performed by an offshore team:
- Collect the needed information and other requirements that were gathered by the onsite team and use them to work on the actual development of the product.
- Concentrate on the foundation of the project’s business goals and requirements and coordinate and help with the client and onsite team on how to achieve them.
- Share the team’s development workflow with the onsite team.
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