How do you measure the return on investment (ROI) from body leasing?

Challenges in measuring ROI from body leasing

Measuring ROI from body leasing can be a challenge because the benefits are often not only directly financial, but also qualitative or strategic, making them difficult to quantify accurately. In addition, it can be difficult to attribute specific business results solely to the activities of hired contractors, as they tend to work as part of a larger team and as part of broader initiatives. Despite these difficulties, there are ways to estimate ROI.

Identification of body costs of leasing

The first step is to accurately identify all costs associated with body leasing. These primarily include the direct costs of hiring specialists (derived from hourly/daily rates/rents and working hours), but you should also take into account any additional costs, such as onboarding, managing the collaboration, providing tools or potential costs associated with contractor turnover.

Identification and quantification of benefits

Next, identify and, if possible, quantify the benefits of engaging contractors. Benefits may include:

• Direct cost savings: Comparison of body leasing costs with alternative costs (e.g., recruiting and hiring full-time staff, project delay costs without additional resources).
• Accelerating time-to-market: Estimating the business value resulting from bringing a product or service to market faster (e.g., additional revenue, gaining a competitive advantage).
• Increase revenue or reduce operating costs: If the project with contractors directly contributed to an increase in revenue or a reduction in the company’s operating costs.
• Improve product quality: Reduce bugs, improve application stability or performance, which can translate into higher customer satisfaction and lower maintenance costs.
• Increased flexibility and adaptability: A harder-to-measure but important strategic benefit of being able to scale a team quickly.
• Access to specialized knowledge: Value derived from the acquisition of unique competencies that enabled an innovative project.

Calculation and interpretation of ROI

Once the costs and benefits have been estimated, the ROI can be calculated, usually according to the formula: ROI = [(Total Benefits – Total Costs) / Total Costs] * 100%. A positive result means that the investment in body leasing resulted in a profit, while a negative result means a loss. However, the interpretation of ROI should also take into account benefits that are not directly financially measurable and the time horizon of the analysis. Sometimes the full benefits of body leasing become apparent only in the long term.

Tools and approaches

Financial analysis, data from project and monitoring systems, customer satisfaction surveys, and comparative analysis (e.g., comparing the cost of a project implemented with and without contractors) can be used to measure ROI. It is important to adopt a consistent methodology and regularly monitor indicators.

Summary

Measuring ROI from body leasing is an important part of evaluating the effectiveness of this collaboration model. While it can be a complex process, requiring consideration of both costs and a variety of benefits (financial and non-financial), it provides valuable information for making informed decisions about IT asset management and optimizing a company’s outsourcing strategy.