1. How Is Your Business Model Different Than Outsourcing ?
Primarily, there are following ways to get your work done in an offsite (ie India in this case). “Outsource” or “Offshore”.
“Outsourcing” means that you ask an Indian company (“Vendor”) to do part of your work in India. The Vendor quotes a figure ie dollar/hour per person, fixed rate/seat or a fixed cost for the job that you wish to get done in India. All infrastructure, manpower and operational expenses belong to the Vendor. You only pay the amount as agreed upon. In outsourced work, all the job work and delivery is the responsibility of the Vendor and you have no direct supervision or management control over the team working on your project. On a fixed cost/seat, you pay to the vendor on a per person per month basis including all infrastructure costs. The team reports to you directly. But you have no control over how much “padding” over the actual costs is being done by the vendor. This is what makes this model expensive, opaque and cost ineffective.
“Offshoring” means that you establish your own company (a subsidiary) in India. Many large companies have done so. Here, there is no Vendor. Your company in India hires an office, hires the CEO, CTO, CFO, HR head and other staff and bears all operational expenses. This company in India is responsible for all regulatory compliance and liabilities as per laws of India including Income Tax, corporate governance and legal filings. You may have already heard it (though things are improving) that India is a very complex country to do business in and this has to be factored in your decisions. All the job work, project management and delivery is done by the team in India.
Our business model is neither of the above. For lack of a better word, we could call it “Offsourcing”. Since we do no delivery or job work for our clients, we do not quote any rate/hour per person or a fixed rate/seat. Also, since you do not establish your own office in India, it is not “Offshoring” also. Our clients do not have any staff in India on their rolls and are not responsible for any tax or regulatory compliance. If you now read our home page once again, you would understand as to how we are offering a unique business model.
2. How Do You Make Money In This Model ?
We do make money otherwise we would not be in business. However, since it s a transparency based model, sometimes we make very little – almost on the margin of break even. Our motive is to establish such a level of trust with our clients so that they never have to shift from us. This way, because of never having to suffer a cycle of “bench” eating our profits, we continue to be assured of regular business for a long term. As our clients start believing in our transparency and integrity, the business is on auto mode since we get to have “permanent” customers. Trust, transparency and integrity is the bedrock of this business model. The driving motive of our business is not high profitability, exponential growth or a burning ambition. “Yogic” pace of growth is more likely to describe our approach to business.
3. Is This Model Suitable For Our Business ?
This business model has been specifically designed for Small & Medium Businesses (SMBs). Global corporates can always open their own offices in India. There are two criterion to decide whether it will be suitable for your business or not.
- The nature of your business has to be such that you can get work done from a staff which is based in India through the use of technology like Cloud based data sharing, Video conferencing, emails, teleconferencing and internet based collaborative Tools & Softwares.
- If you wish that this staff in India should interact with your customers also then Interaction of this staff in India with your clients should be through technological access and not physical presence at client site. That is, the tasks that can be done remotely. Your business could be in any industry viz Software Development, Internet Marketing, Legal services, Insurance services, Finance, HR or Payroll management, BPO/Call center, Utilities, remote computer and network maintenance, data transcription, hospital records etc etc.
4. What Are The Risks ?
It is apparent that if you are a small company and have never tried this offsite model, you will be apprehensive since you may not know any vendor personally and nor have the knowledge of lndian laws, culture and regulatory environment. That is why we said that this model is ideal for small and medium companies since their risk taking capacity is less. Given below are the ways how your risk is mitigated.
- Since you do not own any office here and have no employees on your rolls, you have zero financial and regulatory liabilities. Walk away tomorrow and you will not hear from any Indian tax or compliance agency. The only thing you need to do is to honour your commitment to give us a notice of 60 days before exiting.
- You can start with a team of just two persons here. As you develop the trust, you can start adding more people to your team. Since the notice period is 60 days, you are looking at a risk between USD 8,000 to 15,000 in total for a two month period for two persons.(Of course this amount depends on what level of persons you have hired to do your work but this is a ball park range.) If you can not afford to risk even this amount then you should not look at placing your manpower offsite. If this is of any comfort to you, not a SINGLE client of ours has dropped out after starting out with us. So attractive are the returns, quality of service and the working environment.