advantages and disadvantages of outsourcing

Advantages and Disadvantages Of Outsourcing

Outsourcing has become a favorite business practice for the Western firms. In this article we will discuss an overview on the advantages and disadvantages of outsourcing.

Many companies cannot handle internally all aspects of the business process. Some of these processes are just temporary in nature, and the company does not find it efficient to hire in-house professionals for these tasks. Outsourcing, also called off-shoring, consists in the business practice of allocating specific company functions to a specialized external service provider.

The most commonly outsourced business operations are:

· Manufacturing

· Content Development

· Legal outsourcing

· Technical/Customer Support

· Web Design and Maintenance

· IT outsourcing

· Logistics

· Recruitment

The growing trend of outsourcing is a consequence of the following factors:

· Ability to concentrate on the other crucial business process
· Availability of cheaper labor
· Lack of expert-labor in some fields
All these factors have contributed to finding outsourced partners across certain locations in the world. Technical expertise, good English knowledge, expertise in communication capabilities, and favorable financial packages are among the most important advantages of outsourcing to East Europe, Philippines, and India.

The outsourcing process brings in the advantages of financial freedom and flexibility but it also has its disadvantages. Any company planning to outsource needs to know the pros and cons before making its final decision. For this reason we will take a look here on the main advantages and disadvantages of outsourcing.

The Advantages of Outsourcing

Advantages and Disadvantages Of Outsourcing
Advantages Of Outsourcing

· Outsourcing reduces overhead costs of running back-end operations.

· Outsourcing frees the company from investments in infrastructure, technology, and people supporting the back-end process and makes it more flexible to change.

· Core activities of the business can take center stage.

· Savings in operating and training costs, manpower, effort, and time.

· Outsourcing helps to overcome operationally uncontrollable functions of an organization.

· Outsourcing can give you access to expert, professional, and high-quality services.

· Increasing efficiency and productivity in non-core business processes.

· The possibility to streamline the business operations.

· The business can better focus on the market challenges.

· Outsourcing gives businesses flexibility in manpower management and staffing.

· Offshore outsourcing helps companies to develop new skill sets and competencies that can be a competitive advantage.

· Outsourcing provides swiftness and expertise because tasks are performed by vendors who specialize in their field.

· Risk-sharing by outsourcing certain responsibilities to the outsourced vendor.

· The company can make savings on investing in latest infrastructure, software, and technology when your outsourcing partner handles the entire infrastructure.

· Assurance that the business processes are carried out proficiently, efficiently and within a fast turnaround time.

· The company can cater to new customers’ demands.

· Competitive advantage for the business.

The Disadvantages of Outsourcing

Advantages and Disadvantages Of Outsourcing
Disadvantages Of Outsourcing

· The company faces the risk of outsourcing to unreliable and dishonest “freelancers”. An unreliable freelancer vendor may lack customer focus on the company’s tasks.

· When a company outsources departments handling s sensitive and confidential information such as payroll and HR it faces the risk of exposing confidential business information to a third-party.

The bottom line is that there are more advantages of outsourcing than disadvantages and if you want to stay ahead of competition then outsourcing can help your company achieve your goals. Many companies all over the world have already made this choice.

Comments 2

  1. Alisa Addison

    I believe that there are more advantages on outsourcing than disadvantages. Outsourcing has promising results to ones business. It helps to promote the business and increase profits. This article is very essential to read and understand for those who are planning to outsource and compliance.

  2. Cherry

    Outsourcing has helped businesses focus on their core functions while letting professional outsourcing companies that provide BPO services to take over the everyday tasks. Tasks as important as customer service and customer retention are being handled by third party companies that are giving excellent results and flexibility to your business. Nowadays there’re many software outsourcing company in Vietnam.and I think Vietnam has some advantages to develop software outsourcing such as profession skill, labour, environment,…

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