Last Updated on Sunday, April 14, 2019 by ProsCons
Outsourcing is the process of contracting business functions and processes to an external agency for enhancing service quality, driving innovation or deriving benefits of lower labor costs. By knowing the benefits and side effects of outsourcing you can easily decide if this could work for your business or not.
Let’s take a look at the pros and cons of outsourcing.
Pros of Outsourcing
- Increased efficiency
The great thing about outsourcing is that you have the freedom to choose the outsourcing company which is specialized in a particular skill set or knowledge. They can help you to achieve a more productive, efficient service, often of greater quality with better innovations.
- Quick Delivery
Will skilled persons, the delivery of products can be done quickly and more conveniently. The outsourcing companies operate 24//7 thus, tasks are done in holiday schedule, business operations and also in domestic holidays.
- Improved focus on core business activities
With outsourcing you can focus on its strengths of the business, and also allows your staff to concentrate on their main tasks and on the future strategy
- Reduce costs
Hiring people for outsourcing work is cheaper than hiring full-time employees. It not only saves time and money in recruitment, but it also saves money on everything from benefits to training.
- More Management Time
When a company is not outsourcing, there is a possibility that the activities going on are not given as much attention as needed. But if you outsource activities, then the specialized person focus more on core functions and ensure that the company succeeds.
Risks of Outsourcing:
Cons of Outsourcing
- Hidden Costs
Even though outsourcing work is quite cheaper, there may be a circumstance where you are completely ripped off. The outsourcing companies will make the small business owners sign lengthy contractual agreements where they may include plenty of fine print. Hence, the owner needs to learn the term carefully so that they do not have to pay extra costs.
- Loss of Control
When the outsourced personnel is working remotely, they may take adequate time and effort. With work taking a long time to complete, you may lose control of how those tasks are being monitored and performed. So if you trust the people you hired, you need to be patient with their work.
- Job loss
Outsourcing jobs mean there is very less employment rate. There is some business that tends to offer work at very fewer wages. Outsourcing can be beneficial to a company, but for a person, it may not. Thus, there should be a balance in the local economy without costing companies huge loss.
- Lack of quality
Some outsourcing companies may be interested in profit rather than the quality of the product. This means that the work may be completed quicker than expected but will lack the standard and quality that customers.