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As innovation continues to redefine traditional models, the rise of the gig economy has revamped work and employment dynamics. Within this transformative domain, business process outsourcing (BPO) and freelancing have emerged as key strategies.
While enterprises seek streamlined operations, pertinent questions arise: What is BPO’s primary role in the gig economy? How do BPO workers differ from freelancers? Which strategy suits your company the most?
Let us help you explore the answers in this article.
BPO’s Role in the Gig Economy: Outsourcing vs. Freelancing
BPO serves as a facilitator in the gig sector. The practice provides access to a diverse talent pool and cutting-edge technology, regardless of time zone and regional variations. It acts as a hub that deploys temporary workers to perform project-based functions at affordable fees.
Based on that notion, you might wonder: Is outsourcing similar to freelancing?
Yes and no. Yes, because both outsourcing and freelancing reduce costs and increase scalability for small, mid-sized, and large companies. No, because they have different work arrangements, such as the ones detailed below.
Structured and Flexible Work Setup
Service providers still follow a structured operational arrangement despite deploying professionals for gig work. While your business temporarily hires BPO workers to accomplish non-core tasks, they remain full-time employees of a third-party organization.
These well-trained professionals adhere to standardized processes and workflows. By doing so, they deliver the following BPO advantages:
- Ensure consistent and high-quality outcomes
- Maintain the integrity of outsourced operations
- Meet the client’s specific requirements and goals
- Beat project due dates and quotas
- Protect confidential data from security and privacy threats
- Comply with industry and regulatory rules
Depending on recent demands and trends, BPO companies can scale their capabilities and resources. However, micromanagement in BPO operations limits workers’ flexibility.
Meanwhile, actual gig workers can choose their clients, projects, and work schedules at their own pace. Freelancers decide their work’s scope and nature without worrying about a team leader’s consent. Moreover, they set their rates per hour or output.
Both BPO workers and freelancers can work on different projects across different industries. They strive to accommodate varying client needs and diversify their skills and experiences.
General and Specific Service Range
Providing general and specific services at affordable costs is BPO’s crucial role in the gig economy. Their structured operations allow service providers to deliver comprehensive solutions to cater to a client’s broader or narrower needs. They support a range of functions, including:
- Customer service
- Technical support
- Financial services
- Healthcare assistance
- Sales and marketing
- Manufacturing
- Legal and knowledge processing
Meanwhile, 78% of Upwork’s polled companies hire remote freelancers to handle specific processes where they struggle to hire the most. These include data science, content creation, and software development.
Regardless of how comprehensive a task is, BPO companies and independent contractors use their specialized expertise to deliver targeted support. Their industry knowledge and technological proficiency allow them to provide high-quality services.
Long-term and Short-term Project Timeline
Service vendors typically handle small-scale and large-scale projects that span months or even years. BPO providers still take over roles requiring a long-term commitment, even though short-term projects are the norm when discussing the gig economy.
These prolonged durations let BPO firms integrate seamlessly into your business processes. This capability helps companies keep up with operating model shifts, which 51% of Deloitte’s surveyed executives confirmed. They stated that the advantage encourages them to outsource.
During this collaboration, BPO professionals will absorb your work strategies. They learn about your products and services. Hence, they can deliver your business offerings with the same skill as your in-house team.
On the other hand, freelancing revolves around short-term projects. Freelancers take on tasks that last a few days or months. This timeline allows them to swiftly adapt to changing client demands and transition to other projects based on their availability and expertise.
BPO companies also accommodate short-term projects, especially when they can mobilize resources quickly. They train and deploy specialized teams to perform urgent functions such as market research efforts and surveys.
Permanent and Temporary Client Relationships
BPO organizations play an essential role in the gig economy by offering a permanent business relationship. They aim to build trust and credibility to secure their ranks in the fast-paced market. They also intend to achieve the listed goals:
- Provide sustained value and quality output to clients
- Enable comprehensive service integration with enterprise partners
- Ensure proactive and strategic business alignment
- Maintain a stable and broad client base
- Boost profitability and market standing
However, not all BPO relationships are long-term. You still have the option to break a deal, especially when your partner only brings more headaches and burdens to your business. To avoid such complications, some enterprises resort to freelancing.
As discussed in the previous sections, freelancers work with clients on a project-by-project basis. They offer temporary partnerships that help them build diverse portfolios and expand their professional networks.
Clients can maximize the fresh perspectives and innovative ideas that freelancers bring. Since gig workers do not engage in long-term commitments, organizations only worry about service fees and avoid other contract-related expenses common to outsourcing.
Fixed and Variable Pricing
BPO providers usually run based on fixed, long-term service-level agreements (SLAs). They charge their services per hour or month based on the following factors of BPO pricing:
- Scope and complexity of work
- Contract duration
- Workforce size
- Resource allocation
- Market risks and fluctuations
- Industry trends
- Currency and exchange values
- Labor policies
- Level of expertise
Freelancers also take note of similar factors when pricing their services. However, they only charge per output. For instance, freelance content writers and proofreaders have rates based on the number of words. Some price their services per hour or day.
These two gig models may include both fixed and variable costs. Some client requirements involve overhead expenses. Service fees can also suddenly change based on the volume of work and unforeseen circumstances.
However, BPO firms use economies of scale to offer more competitive pricing. This framework delivers operational efficiencies and cost-saving benefits that result from supporting multiple clients.
Which Approach Best Fits Your Business?
Identifying whether outsourcing or freelancing best fits your business depends on your current needs and challenges. Make sure to clarify your goals before choosing between the two practices. For example, 53% of SHRM’s surveyed organizations encounter a skills gap. Among them, 17% said they leverage independent contractors and freelancers to address the issue.
If you seek BPO roles in the gig economy, make sure they match your work methods. Third-party professionals should be able to help scale your operations without overspending. Selecting the right service provider also guarantees a solid partnership whenever you need their support again in the future.
Meanwhile, choose freelancing if you want to access more specialized expertise in a very short period. For instance, hire a freelance translator if you urgently need help translating a three-page contract document.
The Bottom Line
Be it a short-term or long-term engagement, support vendors are vital in addressing your non-core business requirements without worrying about high expenses. Their structured operations and broad service scope help meet your changing demands. They offer permanent work relationships that allow you to tap into their resources whenever necessary.
Similar to BPO workers, freelancers deliver cost efficiency to your business. Although they support you temporarily, these independent workers provide specialized expertise that matches or surpasses what a BPO employee can give.
However, remember to identify the critical factors before selecting a gig model. Ensure you know what your business needs before finalizing your decisions. Let’s connect and discuss which option best suits your enterprise.
