| It depends to some extent on the arrangement but some benefits include: + rapid on boarding - if the service provider has a bench then it can be much quicker than hiring a significant number of people + flexibility - the client can ramp up and down relatively quickly without the hiring/firing overhead + legal - there is a fair amount of red tape associated with a full time employee that is expensive. A lot of jurisdictions have similar rules with direct contractors. And others along similar lines. Effectively what the service provider is doing is moving some dev staff from a fixed cost to a variable cost. So from the client's pov it's not just the direct cost for the work you're doing that's important, it's also the cost that they won't incur by not employing directly. And that flexibilty/responsiveness can be very, very valuable. If you can cut my ramp up time by 3-6 months, in my line of work, that can easily translate to millions. I'm willing to pay for that. Source, run multiple programmes that use a mix of FTEs, contractors and service providers. |