Without doubt, outsourcing offers an effective scheme to companies today, more so for the ones trying to improve their service while hoping to spend less on labor costs. Despite being a popular choice, a few doubt its efficiency, triggering debates. Yet, what’s useful to one may not be helpful to another. Below are the outsourcing advantages and disadvantages.
Outsourcing Advantages and Disadvantages
Below are few of the reasons you should farm out your tasks to an onshore or offshore service firm.
1. Low cost service
Cost is one of the main reasons and may be the most influential factor firms outsource their work to other companies. With this business practice easing costs, firms will save much money.
Here are non-core tasks and functions that are more expensive when done in-house:
– back-office operations
– management and administration
– human resources
This scheme, too, cuts operating and overhead costs leading to more profit and savings but with few considerations.
2. Concentration on core tasks
In outsourcing, you can focus more on your main functions and keep an eye on the work efficiency and output. With a third party doing tasks you don’t know, you’ll have the chance to concentrate on and do well in your abilities.
3. No new hires
If you can’t do a particular task, hiring an extra in-house worker isn’t a good decision because you must give him/her training and resources. When you outsource it, your hired staff will serve as your remote worker, helping you save money on training and benefits.
4. Access to a pool of talents
If you outsource to an outside party, you’ll gain access to a greater level of “global” skills—something your big rivals enjoy. With a pro handling your project, the staff can work right away (with no worry for training, tools, and resources). Last, you’ll get quality outputs.
5. Economy booster
Outsourcing adds to the economic growth of a country. In particular, it opens opportunities for many job seekers, freelance workers, and even full-time employees. In the same way, it allows access to specialized skills and modern technologies needed by firms.
Meanwhile, outsourcing has its drawbacks, too.
1. Lessened/loss of control or authority
The biggest worry you can have when you farm out your business tasks is losing full control on the outsourced functions. Likewise, this means you’re placing a part of your business on someone else’s accountability.
2. Low service quality
An outsourcing firm can’t be sure to give you a perfect output or meet your expectations. In such a case, the business’ reputation may suffer, resulting in loss of customers, sales, and profit.
3. Loss of job opportunities in home countries
Since outsourcing involves sending work overseas, it can mean loss of jobs in the client’s home country. This fuels the growth in, if not worsens, unemployment.
4. Risk exposure
Security issues are threats that outsourcing can bring to either or both contracting parties. In fact, confidential details, sensitive data, and intellectual property, may threaten the deal because unforeseen factors can expose them to risk.
5. Cultural incompatibilities
Other problems you may have when you outsource to a third party service firm are language and communication barrier and cultural differences. These small, yet crucial factors often affect the practice because poor communication results in poor quality of output.
Then, learning the pros and cons of outsourcing is vital to those who have just started their business. This system can be valuable but likewise risky, too. As mentioned above, views on outsourcing vary from one person to another. In a greater sense, too, its effects vary, depending on the client’s field itself and the purpose for hiring an outsourcing service.
You must assess the possible results. With a click, you can turn to web-based resources to get more knowledge on outsourcing advantages and disadvantages. Want to outsource your tasks? Work with Outsource-Philippines, a firm that offers outsourcing services.
Click here to download a copy of this infographic.
Sources: smallbusiness.chron.com | nytimes.com | forbes.com | Image courtesy of pakorn at FreeDigitalPhotos.net