Outsourcing – What are the advantages and disadvantages of outsourcing?

Outsourcing is a common business strategy. Organizations outsource functions, activities, decisions and responsibility to external suppliers. Outsourcing is through contractual agreements with suppliers, which made ​​taking the risk and responsibility for the quality, people, work process and service of a company. Outsourcing reduces the costs of organizing the costs.

So, why outsource organizations?

Organizations, so they outsource to reduce operating costs and have more time to focus on their core business. Outsourcing can an organization outsource an entire function or just a part of it. For example, you can outsource the payroll function, so that the rest of the accounting system in house.

Outsourcing can be a part of a strategic initiative to reduce costs and improve customer service and quality. Flexible and can be used for a permanent solution orto learn as a temporary agreement with the best techniques, the redesign of a defective product or a gap in employees.

Companies should be determined for the new outsourcing opportunities and potential within the organization to see whether all or only part of a function for outsourcing should be considered.

Each organization is different and may have different needs for outsourcing services. Some of the most common surgery that can be outsourced,are:

  • Bookkeeping
  • Customer service
  • Facility Management
  • Human Resources
  • Information Technology
  • Legal
  • Production
  • Marketing
  • Orders
  • Payroll

Outsourcing Benefits

Core business

Companies that outsource functions have their operation, the ability to focus on their core business and what I’m concentrating well. When companies grow, they are required to perform the functions of the company outside its jurisdiction.Leadership spends a lot of time and energy to learn and operate a system or function that they know nothing. This distraction can get away to take the focus on their core business. An example of this would be a grocery store that their video rental will be added. If the store is focusing too much on the video side of the operation, they can lose on food that is their core business.

Cost savings

Cost savings can be significant with outsourcingBusiness functions. Cost savings may be offset, the setup or production costs associated with office space. These savings free up resources that can be used for other purposes.

Improved quality

Its quality can be suppliers, the know-how and specialized for certain functions to be improved. An example would be outsourcing a function of custody. A seller would often custody facility inspections, hiring and trainingthat could not otherwise available if homemade.

Higher customer satisfaction scores

Seller agreements generally guarantee a certain level of quality and service that may be harder to handle in-house. An example would be if the janitor called in sick, it is looking into the responsibility of the seller to comply with a replacement to a contractual agreement.

The operational efficiency

Specialization seller offers a higher level of efficiency that can deliver fasterTurnaround and higher quality. These processes can be more efficient provider of specialized, because it is the core business of the seller.

Disadvantages of Outsourcing

Quality service

It is important to ensure that it has measurable levels of service quality in this seller. And “common for sellers to leave this to measurable service level agreements for cost savings.

Quality risks

Outsourcing does not exposeOrganizations from some public relations, legal risks and potential quality. An example would be if a car has defective parts and remembers, and the defective part has been outsourced, the automaker still bears the burden of solving the problem. The seller would have the problem, but the negative public perception, which must be specified by the manufacturer to solve.

Language barriers

When the customer call centers are outsourced to a country that does not speak fluentEnglish, it can be a language barrier. Customer dissatisfaction, which happen when a customer service representative has a strong accent that is difficult to understand, can.

Public / employee opinion

There can be no sympathy for civil servants and employees, which is a job that is lost now outsourced. This is sensitive and must be handled with tact and compassion. Communicating these changes need to be diplomatically strategized to minimize the negative impacts.

SilentlyKnowledge

Outsourced employees do not share the same implicit knowledge and passion for the organization as a regular employee. When employees outsourced contact with customers can not have the same knowledge base organization.

Problems of organized labor

Organized labor has strong feelings and has resisted outsourcing to other countries. Pro-labor groups against this management approach, which leads to perceived lower standards of living, andworst working conditions. This perception can affect the productivity of the workforce, as it responds to outsourcing companies.

Security and compliance

Outsourced functions is managed to ensure system security and regulatory compliance. Processes that affect the safety and legal compliance, should be formally addressed by the documentation. For example, a person in outsourcing service access to confidential customer information that could be usedinappropriate.

Force Reduction

Layoffs of employees can be a common result of outsourcing. A well-planned strategy for outsourcing is to do it through attrition and reassignment of work. This can be difficult, but it may help to compensate for the moral problems with the remaining employees.

Organizations should have a well thought out strategy and a plan for outsourcing their business functions. It is also important, at least three requests for proposals (RFP) to solicitto ensure the best use of resources.

 
 
  • Siddarth Sharma

    Thanks for the information. By outsourcing in India, companies accomplish various business functions. However, a prudent outsourcing strategy for customer service does not merely consider cost saving as its advantage. Business outsourcing companies in India concentrate on extending financial as well as non-financial advantages. With 12+ years of experience, GizmoSupport is a trusted outsourcing partner for a number of notable brands. We work closely with companies as a part of their business stratagem rather than as outside vendors. Get in touch with us for call, tech, chat & e-mail support to witness exponential business growth.

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