Advantages and Disadvantages of Outsourcing

There are some key decisions, a company needs to make in order to set up an effective operating cycle and maximize returns. One of them Is the procedure of procuring work. Is it going to be online or offline, via in house employees or through third-party assistance?

Such decisions are ardent as they depend on your type of work, budget, and goals. So, before deciding whether you need to opt for outsourcing or not, let’s look at the significant advantages and disadvantages of the practice, to help you make better and informed decisions. After all, your work is like your baby that you nurtured each day with persistence, and thus deserves the best care.

advantages and disadvantages of outsourcing
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Advantages of Outsourcing:

  • Outsourcing cuts costsOutsourcing operations globally to a third-party company helps reduce Overhead costs such as building a work cabin for employees, operational costs such as transportation and Additional payroll expenses like employee insurance or other gratuity demands.
  • Aligns focus on Key tasks– Sometimes when the core team tries to cover every aspect of operations, they get overburdened, and thus procurement of leads gets staggered. It distracted the personnel from the real objectives of the company. Outsourcing saves time so that you can align focus on the growth and development of your company.
  • Get Expert Assistance– Every person has their niche, and if they are bound to work beyond it, the quality of operations suffers. Your In-house staff may not be as competent in a specific role, for instance, Digital Marketing which leads to a poor Online presence. Outsourcing the same to a Digital marketing expert will boom your SEO and make your company page Google’s favorite.
  • Outsourcing shares risk– Let’s say you are a clothing company outsourcing your stock storing services to a warehouse company. In case of any misdemeanor like fire or natural calamity like earthquake, you and the provider company share the risk by bearing the loss together. 

Disadvantages of Outsourcing:

  • Loss of some control– As you hand over operations to an outsourcer, you also hand over some level of freedom to perform tasks as per the requirements of the company. It is no longer solely you having control over everything, however, if you trust who you’ve hired and kept a regular watch, it is not much of a concern.
  • Hidden Costs involved– Although outsourcing is considered a cheaper way of performing tasks, some companies take advantage of small businesses or people amateur in a specific field and shower them with long contracts and inflated costs. You need to be careful while reading the terms and conditions of the partnership before investing in it.
  • The Risk Factor– There are certain risks like leaking of confidential data, file encryption, or stealing of your work by the provider company. However, if you have done your research and trust the company, it is not an issue. The risk of, however, the hired company going bankrupt still prevails. 
  • Lack of management– In the case of outsourcing beyond the geographical territory, management sometimes becomes difficult. In this case, you need to make sure to set accountable personnel to keep a quality check on operations and ensure effective communication with the outsourcer.

Conclusion

The main aim of outsourcing is to cut costs and save time. If your provider (the hired company for outsourcing) fails to achieve that, it might be time to switch. 

Whether or not to outsource is an important aspect that must be taken into consideration with the pros and cons of the service. If the pros outweigh the cons for your company, Outsourcing is a wise choice to conduct business operations. 

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