TRANSFORMATION IN OUTSTAFF: To switch or not to switch? What are the risks?

June 14, 2023

Outstaffing has proven to be a cost-effective and efficient way to handle complex projects and provide high-quality services to clients.

From my own experience, I have witnessed firsthand the benefits of outstaffing and the challenges that come with transforming a business into an outstaff model. In this article, I will share my experiences and insights into the world of outstaffing, including why it can be profitable, how to prepare for the transition and the myths and truths about outstaffing.

What should you prepare your company, team, and yourself for? How can you avoid confusing customers and where can you find new ones? These are just a few of the questions that will be addressed in this article. Whether you’re a small business owner or a large enterprise, this article will provide valuable information on the risks and rewards of outstaffing.

WHY OUTSTAFF

Because it’s profitable for both, IT company and its client.

Yes, the highest added value on Fixed Cost. But here you, as a vendor, bear great risks. So, where the outstaff will take 100K, the fixed cost will take 200K to cover their risks. That is why outstaff is beneficial to the client. On the other side, you will take much fewer risks.

OUTSTAFF compare.pdf

STRATEGY OF TRANSFORMATION IN OUTSTAFF

💡 Motivation, idea. Give yourself an answer to the question, what is this for you, so that in the future what?

🎯 Write down the final goal according to SMART

📅 Stages of the path as a plan

📄 The project and its implementation

💳 Financing

📈 How does this align with your values now and a year from now?

WHAT TO BE READY FOR WHEN GOING TO OUTSTAFF

💥 Change personally, as a sales and founder

💥 Go bankrupt or close altogether

💥 Work 25/7 without pay

💥 Lose 50% of the team or friends, because they will also change or simply leave without accepting your strategy. It will not work to remain a family company with 8,000 people 😉

💥 Saying goodbye to your favorite customers

*I’m exaggerating on purpose, but it really can happen.

MYTHS OR TRUTHS ABOUT OUTSTAFF

💭 Out staff is profitable.

🗨 Yes, but relative to what?

💭 Out staffing can make quick money.

🗨 Then it is better to buy lottery or bitcoin

💭 Out staffing can be considered as part-time work on the background of the main activity/product.

🗨 We do so, but for this, you need developers and

sales who are ready for this. Because usually,

they aren’t.

💭 Much less risk with delivery.

🗨 It has its own problems. If you think that you can

just hire a developer and just count the money,

then you are wrong.

💭 There is a good COM is more than 90%.

🗨 Yes, if you have long contracts

💭 Stable income

🗨 Yes, if you have stable contracts

FINANCES ARE THE HEAD OF EVERYTHING AND THE KEY TO HEALTHY SLEEP

You have to love financial accounting, PnL, and financial modeling.

OBSERVE THE FOLLOWING POINTS:

🔪 Separate your money and company finances

🤑 Pay yourself only a salary and dividends (the main goal is to reinvest your income and create a safety cushion)

💰 Establish a stabilization fund equal to two payroll funds. If the wage fund is 50,000, then the stabilization fund is 100,000.

DETERMINING THE IDEAL CUSTOMER (IDEAL CUSTOMER PROFILE)

We compiled a profile of the ideal client according to the following criteria:

🗺 Location

⚙ Company Industry

🎭 Age, number of employees

🤴 Who is the Decision Maker

UNIQUE VALUE PROPOSITION

We conducted an NPS survey among our best customers to create a unique value proposition.

KEY QUESTIONS:

How did you decide to work with our company?
How exactly would you recommend our company to your friends?
Why did you start working with our company

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BEGIN THE TRANSFORMATION

Change the environment, and sometimes - developers. Either they will change, or we will have to say goodbye to them.

BAD CLIENTS BRING BAD CLIENTS AND GOOD CLIENTS BRING GOOD CLIENTS.

So stop working with those who are not profitable, steal your time, spam on weekends, delay payment, etc.

TRANSFORM YOUR CLIENTS

We understood that it would not be possible to take on and transfer all clients to outstaff at the same time.

Therefore, we calculated how much Fixed-Cost can really cost with all the risks. We got almost 2 times more for outstaff. So we just say, ok, on outstaff, it costs, for example, 10,000, and on Fixed Cost, it costs 20,000, chooses.

LEAD SEARCH CHANNELS

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✔ have your clients to “refer” you

✔ Upwork

✔ Clutch

✔ Content Marketing

✔ Job portals (Indeed, Glassdoor, LinkedIn)

✔ Slack community

✔ go to webinars attended by your buyer persona

✔ partner leads

✔ even subcontracts

TIME AND PROBATION PERIOD

1️⃣Sometimes clients are hesitant because they have never worked with outstaff. Therefore, we give a trial period of 1-2 weeks.

2️⃣Your task is to quickly “staff” the team and release developers. This may require a bench or resource exchange.

3️⃣If you do not “staff” the team, then you risk losing a lot of money.

WHY CHECK DEVELOPERS

At Outstaff, your developer meets with your client. Therefore, he should understand in which company he works.

How he communicates, whether he communicates, whether he knows the language, whether he meets deadlines, whether he does not disappear suddenly - all this makes your reputation.

Check out the developers. And don’t try to sell Junior for Senior.

Give only qualified personnel. In outstaffing, you can afford higher salaries.