Business Process Outsourcing vs. Embedded Operating Partners
Team building for startups is being upended. What are your options and how can you capitalize on variability to scale?
How startups build their early-stage teams is rapidly changing. As AI continues to challenge (and support) knowledge workers to rethink how they do what they do, the most forward-thinking founders are rethinking the traditional team-building structure altogether. Instead, they’re focused on investing their capital resources as wisely as possible to get to profitability quickly and leveraging best practices in internal product management to tether together the most ideal resources that can make up their “team”.
Outside of personal connections or freelance options, many founders opt for BPOs (business process outsourcing) to help get them where they need to go. Alternatively, models like EOPs (embedded operating partners – aka of All Trades) may be better suited for founders seeking a long-term partnership that feels fully integrated into their work—not as an external service provider, but as an internal, trusted partner.
how DO you preserve your capital in the early days and rethink how you capacity plan as a nascent organization?
Understand nontraditional options and adopt a flexible team structure that grows as you learn.
Why This Works
For capital-strapped startups, it’s often impossible to have one specialist sit in each function, owning it in its entirety. Commonly, outsourcing is a way to preserve cash and still engage experts to get exactly what you need to get done, done.
The conflict in this approach often arises around control. In the era of founder-mode building practices, feeling like any execution is outside of the insight and control of the founder can be a challenge. When leveraging an outsourcing strategy, opting for a solution that combines expert execution with flexibility and oversight can be an effective way to expand your team.
Why Do This Now
In the age of AI, who does what, both humans versus machines and humans with humans, is changing, which means the traditional org structure of sales, marketing, engineering, ops, etc will soon be obsolete. You can preserve your precious early-stage capital by rethinking how you structure the work that’s being done, and the makeup of your “team”. The best founders are challenging their VCs, traditional advisors, and historic standards on what it means to be a team and instead building amoeba-like organizations that are malleable and primed for startup scale.
how we Do: Adopting a right-sized team structure
Tools 🛠️
BPOs: BPO stands for Business Process Outsourcing. It refers to the practice of contracting specific business processes or operations to a third-party service provider. BPO can encompass a wide range of services, including:
Customer Support: Handling customer inquiries, support calls, and after-sales service.
Human Resources: Managing recruitment, payroll, training, and employee benefits.
Finance and Accounting: Processing invoices, managing accounts payable and receivable, and handling bookkeeping.
IT Services: Providing technical support, software development, and IT infrastructure management.
Marketing: Managing social media, content creation, and market research.
Companies often use BPO to reduce costs, improve efficiency, and focus on their core business activities. BPO can be further divided into two categories:
Back Office Outsourcing: Involves internal business functions such as accounting, IT services, and HR.
Front Office Outsourcing: Involves customer-facing functions like sales and customer support.
BPOs can be done domestically or offshore, often leveraging the benefits of lower labor costs in some regions.
BPOs are great when you know exactly what you need. For some functions you might, but for early days when you want to experiment with the execution of this work and see how processes are being built to ensure that they align with your overall startup ethos and org, EOPs are another option.
EOPs: Embedded operating partners are organizations that insert team members within your organization.
An EOP is intended to operate alongside you during the many twists and turns of your startup, from when you’re only a few people, to when you’ve scaled to hundreds. They carry the burden of your variable needs and shift with you as you learn and grow.
Rules (Process) 📝
BPOs: Working with a BPO is structured within how they work. You’ll use BPO’s internal systems and tools, and be managed by their account and customer success teams to ensure their services meet your needs. Scopes need to be clear without straying too far from what’s contracted.
EOPs: EOPs offer flexibility in engagement. While the constant of the company is the EOP, who you’ll work with over time may change based on your needs. EOPs operate best with fuzzy needs and guidelines, shapeshifting with you over time, and ensuring cross-functional operational expertise while working within your tools and systems.
People 🫶
BPOs: Team members within a BPO are intended to feel external. Like consultants, they prioritize their own schedules, ways of doing what they do, etc. They provide a service in the way they do their service. They’re experts in one functional area and own that expertise external to your organization.
EOPs: Team members in an EOP become part of your team, an extension of you and the rest of the org. Members of an EOP are trusted internal operators, building the systems and processes woven inside your organization, so the IP and secret sauce is owned by you. They’ll assimilate to your operating rhythms, and become just as valuable to the fabric of your organization and culture as internal hires.
Actually Actionable
Assess Your Needs: Start by identifying the specific areas where you need help. Do you require expertise in a particular business function (e.g., customer support, HR, or IT), or are you looking for a more integrated, long-term partner who can adapt to your evolving needs?
Define Your Control Level: Determine how much oversight and control you want over the work. If you prefer to delegate specific tasks and focus on core business activities, a BPO may be the right choice. However, if you want a partner to work closely within your organization, an EOP could offer the flexibility and deep integration you're seeking.
Evaluate Flexibility: Think about how much variability your startup experiences. If your needs change frequently and unpredictably, an EOP’s ability to shift with your business might be ideal. Conversely, if you have clear, stable tasks that need to be outsourced, a BPO could provide a more structured solution.
Consider Cultural Fit: If it’s important that external team members assimilate into your company culture and operate like internal hires, EOPs might be the better fit. BPOs, on the other hand, often function independently, focusing on delivering specific services without becoming part of your organizational fabric.
Compare Costs: Budget plays a key role. BPOs are generally more cost-effective for well-defined tasks with predictable outcomes. EOPs, while potentially more expensive, offer a broader range of skills and adaptability, which can save costs in the long run as your company scales.
Start Small, Scale Fast: Test both models on a small scale before committing fully. Engage a BPO for defined tasks while trialing an EOP for strategic, higher-touch needs. Monitor outcomes and adjust based on performance and alignment with your goals.
Before you go
The way startups build their teams is evolving, and founders must be strategic about how they allocate resources to achieve scalability. Both BPOs and EOPs offer distinct advantages depending on your business needs, team structure, and growth stage. BPOs excel in providing specialized expertise for well-defined tasks, helping you maintain focus on core business activities without needing to manage every detail. On the other hand, EOPs go deeper by integrating into your organization, offering flexibility and adaptability as your needs shift and grow. They become true partners, aligning with your long-term vision.
The most successful startups today are those that rethink traditional team structures. By leveraging outsourcing models that fit their unique demands, they maintain agility, preserve early-stage capital, and ensure access to expert talent when needed. However, the choice between BPOs and EOPs is not an "either/or" decision—it’s about understanding when each approach makes sense for your business.
Start by assessing your immediate and long-term needs, then test these models in small ways to find the right balance. A well-thought-out approach to team-building can be the difference between scaling efficiently and burning through precious resources. Don’t be afraid to push boundaries, experiment with different models, and challenge traditional expectations of what a "team" should look like.
Ultimately, the best decision is one that aligns with your company’s evolving goals, keeps you nimble, and empowers your startup to grow on your terms.
Writer: Britt