Last Updated on March 5, 2021 by Filip Poutintsev
In today’s competitive era, efficiency has become the key component that steers the prosperity of the business. Several strategies and techniques, such as using technology in business, have always experimented to strengthen this key component. One such strength is outsourcing which has become one of the hot topics of talk in the business world over the past few years.
Table of Contents
- What is Outsourcing?
- Advantages and Disadvantages of Outsourcing
- Pros of Outsourcing
- Cons of Outsourcing
What is Outsourcing?
Outsourcing is a process of contracting a business function to a specialized agency to perform tasks assigned to them on behalf of an organization. There are service providers like BPO Outsourcing, Call Centre Outsourcing which has been assisting businesses to run without friction.
Advantages and Disadvantages of Outsourcing
Outsourcing may not always be the best option for every circumstance, but it surely does help the company enhance the efficiency and raise the standard high, but it’s important that the business holder do their own research before investing time and energy into it.
Pros of Outsourcing
1. Access to the Experts
Despite the fact that your organization may be brimming with a profoundly qualified group, they may not really be a specialist in a specific field.
At the point when you hire people from outsourcing organizations, that usually means you have access to people with knowledge, professional training, and experiences about varieties of products so you will have a more precise and detailed product.
2. Focus on the Major Activities
At times, the core manpower of the businesses is focused on activities like data recording, operational tasks and so on.
If you outsource activities like this to an outsourcing partner, then these activities get off the back of your core resources and your core team can focus more on present growth and future strategies.
3. Mitigate Risks
When you have outsourcing partners, that means you distribute some responsibility to outsourcing partners. If you outsource partner for the specialized event; for example, some sort of campaign or processes, then expert of that particular field will apply their enhanced ability to plan and strategize onto the particular task, which mitigates potential dangers.
4. Reduce Costs
Outsourcing a partner, more often than not, will be cheaper than hiring a full time, permanent member. You can save yourself from recruitment costs. Additionally, expenditures of office spaces or extra manufacturing setup will also be wiped out.
5. Improved Service for Customers
When you outsource partner, your outsourcing partner will utilize their aptitude and experiences to the product which will upgrade the quality of the product.
A quality product will be delivered on time which will increase consumer satisfaction. It might also influence other individuals to be loyal customers of your business plus the existing customer will also link up to be loyal.
6. Competitiveness increases
It enables the market to increase the competitive horizon. When you have a strategic outsourcing partner, you are providing customers with the best services.
You are also increasing productivity as well as managing your resources snappily. It can also raise your standard much higher than those businesses who might not know the advantages of outsourcing in the business yet.
7. Flexible manpower
On the off chance that your business has tasked with repetitive or regular requests to get additional staff, outsourcing gives a chance to benefit of extra employees when you need it and discharge them when they are never again required.
8. Continuity of Work
One significant advantage of outsourcing computerized work abroad is the vast differences you may experience as far as time zones and occasions.
Despite the fact that this can represent an underlying obstacle strategically, once conquer it can successfully mean your business is running even while you’re sleeping soundly.
9. Operational Proficiency
An outsourcing partner acquires particular information and experience, which in result prompts increment in profitability and effectiveness of your business.
Now let us discuss some disadvantages now
Cons of Outsourcing
1. Quality Might Not be Maintained
Outsourcing companies may be profit-oriented. They might focus more on profit than getting their tasks done competently.
This might sometimes not meet the quality and standard of the business in a way that your customers expect from your business or product or services and this can be the reason for the degradation of name and the reputation of a company.
So it’s better to communicate well with your outsourcing partner the quality outcome you for management
2. Management Issue
Any firm needs a manager who is highly qualified, who is able to meet the demand of the manpower and make sure that all the providers are constantly conveyed and updated regarding information or changes to meet the requirement.
If this is not the quality of the manager then companies cease to function to outsource their business because of poor management.
3. Security and Privacy Risk
Anytime you engage somebody new in your business, be it a new supplier or a new employee you are risking the confidential data. The case is similar for outsourcing partners too.
The customer only shares their personal data with the company because they trust the company and that should be respected. Outsourcing means you are also putting in the risk of privacy and safety of the company to others than your company.
So you as a company should effectively work on mitigating this risk as much as possible.
4. Hidden Costs
Although outsourcing is considered to be cheap, many outsourcing companies may not tell you about the additional expenses you might have to pay later. When you sign those lengthy agreements without reading the terms and conditions carefully then you could be on the burden of unexpected costs.
5. Control Issue
Although you’ll offer direction in respect to what you wish to accomplish, you quit some management once you outsource a function to the third party.
There are several reasons for this, as well as the fact that you simply are usually hiring a contractor rather than a worker. And since the person isn’t operating on-the-scene, it is often troublesome to take care of the extent of management you need.
6. Little or No Growth of Internal Manpower
If your business has a long-term project and you are giving all the functions to the outsourced team, then it might be difficult for them to eliminate the issue which might arise and when vital tasks are being outsourced, the organization is extremely dependent on outsourcing provider.
If you are an executive board member or simply a project or program manager, whenever you decide to outsource partner or team for your organization or any third party, you need to understand the potential hitches. So before planning to outsource, it’s better to understand the benefits, and drawbacks of outsourcing!