If the question was asked years ago, the answer would’ve been that outsourcing is the dirtiest word in business.
But time changes and outsourcing has become an efficient way to develop your business. A popular way to describe the term is to resolve the field you’re good at and outsource everything else (prioritize on your business’s core objective, and let others do the rest).
Though, outsourcing is not as easy as it sounds.
So, thoroughly analyzing outsourcing pros and cons will help to determine, if it perfectly syncs with your organization.
There are numerous things that individuals can, but shouldn’t do because the quality of the work may harm the company’s overall image.
For instance, creating a basic website is a simple thing that most people could do, but the gap between hiring a professional and designing it by ourselves is unbelievable.
15 Outsourcing Pros and Cons
Considering the benefits of outsourcing is essential for company growth and efficient money spending. Furthermore, outsourcing has a lot more to offer than just saving money.
Read 7 advantages of outsourcing to fully understand how beneficial it is.
More Time to Spend on Core Activities – Successful companies have the potential to rapidly grow, which also results in back office operation expansion. Without a doubt, such growth will affect HR and financial resources.
Therefore, activities that delay your business’s improvement, should definitely be outsourced because it gives the opportunity to refocus on the core objectives of your organization.
For example, if a company signs an unbelievable contract that promises to quickly increase the volume of purchasing; purchasing must be outsourced.
Reduced Costs – When your brand is preventing you to efficiently function, using the most influential factor of outsourcing will dramatically reduce your costs.
For instance, a company willing to accept several insurance plans, can’t possibly keep up with a single part-time employee. So, outsourcing a medical billing organization is a wise decision to make.
Operational Control – Costs of operational control are frequently running out of control, so including it in our “to outsource” potential list is vital.
For example, information technology sector that has too many projects to manage, lack people and has a financial plan that goes beyond their benefaction to the organization, should come to an outsourcing agreement, which will reinforce control of the area.
Risk Management – High employee turnovers will give birth to doubts and inconsistency to your workplace. So, outsourcing will make up for the loss that turnovers have brought.
For instance, for certain reasons, if a marketing manager will have to depart for a long period of time and if his assistants leave for new jobs, outsourcing marketing’s function in business will help to resolve the problem.
Developing Internal Staff – Mostly, while working on large projects, teams don’t possess the right skill assessment.
Consequently, project outsourcing will bring the precise individuals that will participate in the process or train/educate the staff until they become “useful”.
For example, as time passes, large projects require new equipment and designs. But our employees don’t have the skills to design or upgrade the equipment.
Therefore, outsourcing is the most effective decision to make.
Time Zone Factor – The comfort of the concept “making money while sleeping” is easily attainable with outsourcing. When your workplace is closed, your company can still function and bring a profit.
For example, support, web development, delivery or anything you can come up with can be outsourced for your beneficiary.
Moreover, there will be no necessity to close your business on local holidays because your staff is worldwide.
Benefits of Distant Relationships – Let’s face it, monotonous HR problems are frustrating, but having not-too-close relationships with your staff eases the task of firing.
Therefore, the bond between the employer and employee isn’t powerful and personal feelings don’t get in the way.
Increased Operating Capital – Outsourcing indicates to lowering your expenses, hence if your sales volume don’t drop, you’ll have extra money to spend on marketing strategy development (you can also spare some money on implementing grassroots marketing).
7 Disadvantages of Outsourcing
Despite the advantages outsourcing carries, there are several disadvantages that must be taken into consideration.
Reduced Quality – If a business can’t strictly monitor the outsourced product quality, it’s highly possible that the hired individual may deliver an inferior product, which will severely damage your brand.
Thus, regulating the production process is essential to maintain high standards. Also, you’ll lose the capability to quickly answer to changes in the business environment.
Bad PR – Customers often see outsourcing as a cause to not trust an organization.
Due to the fact that outsourcing jobs are taken by those who are underpaid or work in inhumane circumstances, is a sign for consumers to feel suspicious because some countries allow those companies to pollute the environment.
When such situations are found, journalists often publicize it and it negatively affects your brand.
Hidden Costs – After finding an outsourcing company, signing a contract with them is a must and anything not included in the contract will indicate to paying extra charges.
Furthermore, hiring a lawyer is crucial, because reviewing the contracts you’re about to sign is essential to avoid misunderstanding or misleading.
Note, that you’re playing the game of the outsourcer, they’re the ones writing the contract and while negotiating, their advantage is visible.
Financial Well-Being of the Outsourcing Company is Heavily Linked With You – As you’ll be turning over parts of your business operations to another company, the importance of their well-being equals yours.
It’s highly possible for an outsourcing company to go bankrupt and drastically damage your organization.
Lack of Focus on Your Project – As a business owner, your top priority must be ensuring your staff’s dedication to the project.
But, making sure that your part-time hired, outsourced team’s productivity is at their best is one hell of a work.
On the other hand, loyal employee’s productivity is easier to control.
The Concept of the “4x Rule” – One of the worst parts of outsourcing is waiting and that’s precisely what 4x rule refers to.
It seems to be an absolute rule, that affects every outsourced individual hired to work on a specific project. And the reasons may vary from communication lags to inaccuracies.
Bad Publicity – Outsourcing may mean different things to different people.
For example, if the outsourcing company hires your relatives, friends and neighbors, it’s good, but if the organization is sending them abroad to work in different person, then without a doubt, it’s bad.
Thus, outsourcing may bring bad publicity.