Outsourcing – Is it an Advantage or a Disadvantage?

Outsourcing – Is it an Advantage or a Disadvantage?

Outsourcing can be both beneficial and non-beneficial depending on your reason why you choose to outsource. To begin with outsourcing, according to Wikipedia, “is the process of contracting a business function to someone else”. But why outsource if the job can be done in your own company by your own employees? Therefore, the reason behind outsourcing plays a vital role in the decision to avail of services outside the company.

Outsourcing is a very popular idea nowadays and there are many companies seeking competitive gain that engage in it. They take advantage of the higher chances of getting ahead as they focus on the company’s core competencies.

Some beneficial gains a company can derive from outsourcing are:


For a company that is meeting a client expectation on occasional projects, not buying expensive hardware and software just to complete the project means savings if it can be outsourced.

Training and spending on staff to learn additional skills for tasks that are seldom assigned is not practical.

Reduced Management Headache

Naturally when you outsource, you get the one that can one hundred percent do the job right and on time for you or you don’t pay. The troubles and costs of trial and error are avoided.

More Time for Core Company Processes

When you outsource, management and staff are able to concentrate on what your business is really all about thereby giving the business the much desired competitive advantage. Outsourcing non-core related tasks or assignments allows a business more time to focus on what could grant the business more strength in terms of positive productivity.

However, it is not always advantageous to outsource. Below are some of the reasons why outsourcing can sometimes work to your disadvantage:

Non-full Control

Because you can’t fully manage the project you choose to outsource, you can’t expect to apply full control over it unlike when it’s your staff that handles the job. Careful selection of a reliable and trusted outsourced services provider is essential.

Risks Involved

There are certain risks that may be involved such as when the outsourced company goes out of business at a time critical to you. Finding and quickly transitioning to a new company may or may not be harmful to your business.

May Cost More

Outsourcing definitely means additional expenses because you will have to pay extra for the job you wish completed. It is important that when you choose to outsource, it is because there’s more gain to be had from it than losses.

Security and Confidentiality Concerns

There is the risk of exposure especially if what’s outsourced is payroll where confidential details such as salaries get to be known by the company that will do the job for you.

A simple research and not regarding outsourcing as a mere money-saving measure may save you the troubles of the disadvantages. Just make sure you have a valid reason in getting the help of an “outsider” and that you have weighed its pros and cons carefully.

Source: ezinemark.com
CATEGORY: Useful Articles
  • http://inmaxmind.com/ Max Büchler

    Great read. I will try to keep it short…

    Agree in A’s and DA’s and you can add more on both sides if you want to. But I think the most important thing to address is the one you mention; you have to know why you want to outsource or adopt a cloud service. It’s like any other business decision; you have to have a goal, a strategy and to know why you have it.

    The reason why you want to outsource should be your reason and it should be motivated. Maybe based on a recommendation from an external part (trusted advisor, management consultant or similar) but always motivated. You should not outsource if not truly motivated or with a motivation like “everyone else” or “we save money”; “”we” are not everyone” and “why do we save money” are relevant q’s.

    Once the decision to outsource is taken;
    - Use professional support (if not inhouse) to find out how to, when and who should source it.
    - Consider schedule; do not rush in to wrong solution and sourcer.
    - Without slowing down; don’t force the project, it will not be a good result – and it’s your business you’re dealing with. The sourcer will climb mountains to succeed.
    - Information, information and information to the organization: when, why and how.
    - Stakeholders and good sponsors. You, as a leader, should not be alone in this decision.
    - Sign a good agreement.
    - Choose sourcer and solution wisely. Even if a good agreement it will take tons of time & money and loss of confidence if you annul the deal. You can’t afford to choose wrong.

    Quote from a colleague: “Compared to buying cheap you only cry once when buying quality!”

    Try to let go of control, trust the sourcer as you trust the one who build your house, the captain in an airplane, the chef in an restaurant – they are all professionals and so are the sourcers.

    In the same area; ‘Don’t blame the cloud’ (http://inmaxmind.blogspot.com/2011/09/dont-blame-cloud.html) on inmaxmind.com


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