Using an offshore managed services partner vs using freelancers directly

During the global pandemic years of 2020-2022 nearly every company was forced to look at alternative ways of working, and many adopted "work-from-home" just so they could keep their operations running amidst lockdowns. The financial strain also forced some to start considering offshore talent, particularly for IT and front office roles.

Now that the pandemic is over many are wondering - "couldn't we just keep using freelancers?".

This article will dig into some of the factors that should be considered when deciding whether to stick with freelancers or perhaps indicate it is time to work with an offshore managed services partner.

Cost

While you might think that using an offshore managed services partner is going to be more expensive than engaging directly with a freelancer, that's not necessarily the case. Freelancers tend to set their own rates without benchmarking against the industry, and potential clients might not do their own research to find out what a realistic rate is, or struggle because the rates will vary depending on the home country of the freelancer (and even which state or city within the home country!).

An offshore managed services partner will have extensively benchmarked rates to position themselves as competitive both for clients and talent, and given they operate large scale operations the overhead for the managed service is usually negated by the better base pricing they can offer.

Engagement & Quality

Freelancers, by nature, generally work on short-term projects and are engaged with multiple clients at once as it offers a higher income and more variety on a day-to-day basis. They tend not to prefer long, continuous engagements with the same client, and over time this can lead to a reduction in engagement, quality issues, and burnout, causing frustration for everyone involved.

With a dedicated offshore team via an offshore managed services partner, you gain access to talent that is 100% focused on your business because that is the style of work engagement they enjoy, and with the offshore managed services partner acting as your HR team you can ensure productivity and quality are maintained as part of the engagement.

Additionally, an offshore managed services partner will conduct extensive interviewing and vetting, and will generally have more experience in evaluating talent from the offshore country leading to a higher chance that you'll have great talent working as part of your team!

Commercial Overhead

When you engage with a freelancer, your company has to enter into and manage individual contracts with each and every freelancer you engage with, as well as processing and paying multiple individual invoices and handling all the queries about late or incorrect payments. For small, short term projects, this might be fine - but for long term engagements, this is an unnecessary burden that will distract you from running your business.

An offshore managed service partner means one single commercial contract, and one commercial invoice with one point of contact -- for the entirety of your engagement. They take care of all the commercial details so that you can focus on your operations and maximize the benefits of having an offshore team. If you need to scale your operations, add new talent, branch out into a new expertise, or rapidly pivot your operations, you'll have a dedicated account manager who'll take care of all the execution in the offshore country.

Employee Benefits

When you hire a freelancer you'll have no idea whether they are eligible for benefits in their home country, such as public health and medical coverage, social security, and other government-operated initiatives that are generally only available to "employees" who have an employer paying contributions as part of their labor law obligations. By paying a freelancer directly, they may not be eligible for such benefits, and this may also make it difficult for them when applying for loans with a bank unless they register as a small business and pay their tax obligations.

For freelancers, in the first few years and when they are relatively young, they may not mind not having these benefits, but as they become older and start considering starting a family you can rest assured they will think twice about what entitlements they could be getting.

However, with an offshore manage services partner, your team are hired directly as full-time employees and all the necessary contributions are paid to ensure each of them are fully eligible for all governments benefits, as well as providing additional benefits like private HMO. They will also have a record of employment with pay-slips so that in time they are eligible for bank loans.