Outsourcing: Benefits and Risks

Outsourcing: Benefits and Risks

Thinking about outsourcing?

Maybe you should be.

Outsourcing is becoming bigger and bigger and turning into quite a global competitive strategy.

What are the reasons?

1. Cost Saving

  • No employee related taxes, no insurance fees, no vacation, sick or holiday time to pay.
  • You pay only for the exact time the contractor spends on a specific task. No full or part time salary.
  • You do not need to provide any work space, equipment, supplies or training

2. Time Saving

  • With the small tedious task out of the way, you have time to focus on developing and promoting the core business.
  • On the other hand you can also use this newly found free time to relax and enjoy yourself outside of work.

3. Quality Improvement

  • If you have checked and tested the contractor or company you are outsourcing to, you should have found one who specializes on the specific task that is outsourced to them. This way, the quality of their work has to be, by definition, higher.
  • Keep in mind, the independent contractor or outsourced company, is also company and as such works to keep a good reputation and satisfied clients. So their work has to be top quality.
  • You have many talented people at your disposal and you can always change your mind if you are not satisfied and find someone else to do the job. Be sure though, to take all this into account when agreeing on a contract. (See risks below)
  • You may have notices specific areas of liability in your company and thus outsource to improve competitiveness.
  • The outsourced company will be ready to deal with any temporary increase in production.

However outsourcing also has risks you have to take into account and ways to prevent things from going wrong

What are the risks?

1. Security

Before outsourcing an organization is responsible for the actions of all their staff. This is not the case with an independent contractor. This causes legal, security and compliance issues that need to be addressed through a contract.


To prevent any trouble, when outsourcing make a very specific contract with financial and legal penalties, make sure to double check everything and always sign a confidentiality agreement.

2. Fraud

Fraud is something to be very careful about and when outsourcing, credit card theft is a major danger.


Double check the company you are about to hire, search the internet, ask for former clients, recommendations and check them as well.

3. Qualification

Another risk is whether or not the outsourced company or contractor is qualified enough to take on the job. You don’t want to give your tasks to someone else only to find you could have done it better yourself!


Test the company or contractor before hiring them to make sure they are the real deal! Give them some sample work to do for free and if the quality of the results is what you want hire them for the full job. However don’t take advantage. Do this only if you are in doubt.

At the end of the day, yes there are risks when outsourcing, but you can take measures to minimize or even eliminate them completely.

Source: EzineArticles

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