Staff leasing vs. seat leasing vs. BPO vs. B-O-T

What is the difference between staff leasing, seat leasing, BPO, and BOT?

Staff leasing, seat leasing, BPO, and BOT are four outsourcing models that differ by how much you hand over: staff leasing shares your people, seat leasing rents your office space, BPO runs whole functions, and BOT builds a team and later transfers it to you.

• Staff leasing: a partner co-manages the staff you handpick.
• Seat leasing: you rent a ready office and equipment.
• BPO and BOT: a provider runs functions, or builds a team you take over later.

As far as outsourcing goes, businesses have many choices. In fact, the right model helps you control budget, costs, and return on investment. In short, you can outsource by level: staff leasing, seat leasing, full business process outsourcing, or Build-Operate-Transfer. It also helps to know the different types of outsourcing before you choose.

What is staff leasing?

Staff leasing is an outsourcing model with a contract for employee recruitment. You work with a leasing firm or a PEO (Professional Employer Organization). This suits companies that want to hire in-house and remote workers with fewer risks.

Here, the client can handpick the team. However, the provider co-manages the whole hiring process. The third-party firm handles tasks like admin work and human resources. In many cases, it works much like staff augmentation, where you add skilled people to your existing team.

Advantages and risks of staff leasing

Companies enjoy several benefits from staff leasing.

• Shared risks in hiring. Clients do not carry benefits and compliance alone. Instead, they share these risks with the provider.
• Access to top talent. Employers reach highly skilled people, both local and remote. After all, providers have years of expertise in hiring.
• Better employee benefits. With staff leasing, workers get stronger benefits and perks during their time on the job.

However, staff leasing also brings risks, mainly around control. Because you share staff management with the provider, most decisions go through them. This includes communication and control over your workers. As a result, some firms grow too dependent on the provider over time.

What is seat leasing?

Seat leasing, on the other hand, is mainly about renting a ready office. You lease a fully equipped workspace instead of building one. So it suits businesses with small teams that do not want a big office investment.

Companies have two seat leasing options: cold seats and warm seats. Cold seat leasing includes office basics. For example, it covers computers, internet, furniture, and other needs. Meanwhile, warm seat leasing goes further. In addition, it adds the option to hire extra staff for tasks like accounting and admin work.

Advantages and risks of seat leasing

Seat leasing is arguably the most common outsourcing form in places like India and the Philippines. It also costs less than renting a full office on your own. A 2017 data analysis in the United Kingdom found that firms overpay for workspace due to hidden costs. These include the cost of tools and equipment.

With seat leasing, you only pay a monthly fee for a furnished office. However, most seat leasing offices share pantries and utilities. Meeting staff from other firms can be nice. Still, some clients may not like this shared setup.

It can also make it hard to book meeting rooms and breakout areas. So private events and exclusive meetings may take extra planning.

What is business process outsourcing (BPO)?

A full business process outsourcing setup means a long-term deal with an outside provider like ConnectOS. The provider handles functions such as admin, content, delivery, and technology.

BPO can work in three ways: onshoring, nearshoring, and offshoring. For example, onshoring uses a local provider for back-office and front-office work. Meanwhile, clients who want the most savings usually pick nearshoring or offshoring instead. The main distinguishable difference is location, since nearshoring taps nearby countries. For a deeper look, see this guide on outsourcing versus offshoring.

Advantages and risks of business process outsourcing

Companies choose outsourcing for clear gains.

• Save on costs. Outsourcing helps clients save up to 70% on costs and lift profit.
• Access to world-class staff. They easily find suitable, high-quality talent for the work.
• Tap a wider market. Firms can enter new markets through their offshore and nearshore teams.

However, BPO carries risks too. Onshoring keeps your local touch, yet it offers fewer savings. Nearshoring and offshoring, meanwhile, pose risks to data security and intellectual property. So firms and providers work hard to boost security and block data breaches.

What is build-operate-transfer (BOT)?

Build-operate-transfer (BOT) is a model where a firm partners with an offshore agency to build and run an operation. During the build stage, the agency sets up the whole infrastructure. For example, this includes staff, office space, licenses, and all essentials.

Later, once everything is ready, the business transfers to the owner. In outsourcing, BOT clients often start with staff leasing or seat leasing. Then they take over the team when they are ready. You can see the full flow in this guide on how build-operate-transfer works.

BOT also takes different forms by country. For instance, India leans more on build-own-operate-transfer (BOOT) for software and IT services.

Advantages and risks of BOT

BOT needs only a short setup time. In fact, that beats building a new department from scratch. In addition, the partner shares its know-how in building an operation. So it helps small firms that want offshore teams for the first time. Because they co-manage the work at first, they also face lower build risks.

However, firms should plan which functions to run through BOT. Once you absorb a team, workers fall under the company’s long-term retention program. This is not ideal for teams that must scale down with demand.

The transfer stage also means heavy paperwork and higher charges for the client. So firms should be ready before they move an operation in-house.

Recognizing the pricing, labor costs, and internal revenues

One main reason businesses and companies outsource is to cut costs while lifting sales. In fact, price is often the top factor in choosing where to outsource.

However, first decide which functions you want to outsource and the quality you expect. This helps you see if outsourcing that task really saves money. Next, work out the in-house cost of the same function.

Then calculate both the outsourcing cost and the in-house cost. Deduct one from the other, and you get your total cost savings. Many firms also compare providers in top hubs, such as offshore staffing solutions in the Philippines.

Frequently asked questions about outsourcing models

What is the main difference between staff leasing and seat leasing?

Staff leasing gives you people managed with a partner. Meanwhile, seat leasing gives you a ready office and equipment. In short, one is about talent, the other is about space.

Is BPO the same as offshoring?

Not quite. BPO means a provider runs your business functions. In contrast, offshoring means those functions sit in another country. So BPO can be onshore, nearshore, or offshore.

When should a company choose BOT?

BOT fits firms that want their own offshore team later on. You start with a partner, then take over once the operation is stable.

Which model is the cheapest?

Seat leasing is often the lowest upfront cost for a small team. However, full BPO can save the most overall, since it cuts labor and fixed costs.

How do I pick the right outsourcing model?

First, list the functions you want to hand off. Next, weigh cost, control, and risk. Then compare in-house and outsourced costs before you decide.

Key takeaways

• Staff leasing shares your people with a partner who co-manages hiring.
• Seat leasing rents a ready office, which cuts upfront costs.
• BPO hands whole functions to a provider, onshore or offshore.
• BOT builds a team you can take over once it is stable.
• Compare in-house and outsourced costs to find your real savings.