Outsourcing Pros and Cons: Arguments For and Against Going Offshore

Outsourcing Pros and Cons: Arguments For and Against Going Offshore

Whereas before, outsourcing has been the domain of large organizations, it has now effectively taken its place alongside the enterprising entrepreneur. In fact, despite its history and original design, it seems to have befitted the small business even more so. And though it’s steadily rising in popularity, many are still wary. The skeptics that I know, however, are those who have had wild success with it because they have taken the time to criticize the model and thus, enabled themselves to work around its misgivings. In this article, we examine in brief some of those outsourcing pros and cons in hopes perhaps to convince the dubious and to tame down the overly enthusiastic. As Dave Walsh, author of Source Control, had said:

Without a smart system around it, outsourcing can steal more time than it saves…

Why do companies outsource? Here’s just a few reasons for outsourcing:

  • frees you from ancillary business activities so you’re able to better focus on your core competencies;
  • injects efficiency into your non-core competencies without sacrificing your core competencies;
  • allows for a flexible model for overhead costs that is in accordance to spikes and dips in business;
  • offers a variety of specialized skills that you otherwise may not want to hire a full-time employee for, avoiding fixed costs;
  • makes innovation possible without a major cash injection;
  • allows you access to up-to-date technologies, infrastructure, workflows and processes (e.g. software) without the usual costs affixed to purchasing them;
  • creates an environment where the risks are shared between you and the contractor;
  • places very minimal staffing responsibilities on your company;
  • enables you to scale your business incrementally without a large capital infusion

On the flip side of the coin, what are the disadvantages of outsourcing?

  • who did what and when: this is called operational memory loss where nobody remembers where that file is, who’s accountable for it and when it was accomplished;
  • transfer and third-party mishandling of confidential or proprietary information;
  • communication challenges resulting either from not being in the same building or especially, if you’re outsourcing offshore, language barriers;
  • higher turnover rates. Outsourced tasks do tend to be monotonous (admin tasks, for example) and your virtual staff might find it difficult to keep their enthusiasm up.

The risks of outsourcing might be a shorter list compared to its benefits, but they are not without impact. However, don’t make the mistake of thinking that these are actual reasons not to outsource. These are just the risks. If you invest the time to design a strategy that will mitigate those risks or create a contingency plan for when those risks do become a reality, then the benefits associated with outsourcing is well going to make it worth your valuable in-house resources.

Source: EzineArticles
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