Advantages and Disadvantages of Outsourcing

The tremendous growth of the outsourcing industry is attributed to the 1) huge benefits that businesses, both small and big, have experienced from outsourcing, 2) emergence and rapid growth of capable service providers who leave the corporate world, and

3) advancement of technology used in the industry.

Advantages of Outsourcing

The top benefits of outsourcing are:

•   Significant  savings on overhead – salaries and training costs
•  Achieve speed - due to round-the-clock shifts in most offshore outsourcers’ location, work is completed fast
•  Improved quality of service due to specialization or field expertise of provider
• More time to focus on core business
•  Increased business opportunities
• Access to highly specialized skills
• Access to better technology  
• Save time and energy
•  Avoid stress and have more time for relaxation and recreation
• Hire only on a per-project basis  

What to Outsource

Some business activities that can be outsourced are customer service, data entry and conversion services, transcription services, finance and accounting services, billing, collection, tax preparation, claims processing, statutory reporting, patent writing, evaluation, architectural services, blueprint creation, translation services, graphic design, website development, typesetting, HR Services such as recruitment, payroll processing, insurance services such as adjustment, claims processing and management, distance learning services such as course development, online training, marketing advertising and PR services such as press release writing, copywriting, marketing plans, social media marketing,  product and brand management, sales management, publishing services, design, legal services such legal research, information gathering, office procedures, and brief drafting.  

Disadvantages of Outsourcing

These are the possible risks and disadvantages to outsourcing:

• Job drain and its economic implication
•  Intellectual property and security issues
•  Loss of direct control
• Standard of quality may be compromised
• Loss of Corporate Social responsibility implementation
• Contractor may not have a genuine commitment to your success
• It has a psychological impact to your in-house employees
• High staff turnover as a result of low employee morale due to outsourcing
•  Non-retention of Talent
• The usual staff training, performance assessment, and feedback will also consume time.  

How to Make Outsourcing Work Best for your Business

Successful outsourcers have developed preventive measures and business practices to ensure foolproof outsourcing activities. These are their recommendations:

1.    Determine your needs. Assess your own competencies, strengths as well as your handicaps. Is it lack of time? What non-core tasks are most time-consuming? This is one way to decide which business tasks can be farmed out.

2.    Know exactly what you’re looking for so you’d know exactly where to look.

3.    Find the right service provider. Review the services they offer, the terms and conditions, their roster of contractors, profiles and other information about the prospective contractors.

4.    If you do not have a service contract ready, then review the service provider’s contract very carefully. If it does not meet your specific terms and conditions propose a revision accordingly.

5.    Communicate your expectations to the contractor. Let them know about your expectations and standards.

6.    Conduct training or orientation. It is important for the contractor to know your company, your company’s mission and vision, your clientele, your system, procedures, and specifications so he/she can align her goals and activities with yours.  

7.    Give your contractor/s enough time to get acquainted with your processes. Be patient as there will be a learning curve on the contractor’s side.

8.    Some measure of trust is necessary to allow for resourceful freedom and inspired creativity.

9.    Keep yourself available to answer vital questions from your contractor.

10.  Give honest feedback.

Managers can address any outsourcing risks. In fact, successful Outsourcers have transformed their business practices to cope with these risks. Disadvantages can also be avoided by partnering with the right service provider. If you are really interested in finding out how outsourcing can help your business, then don’t  any of these disadvantages stop you.* written exclusively for 2damcreative