Outsourcing, the hiring out of contractors, freelancers and the like to perform jobs, has been around as long as people have conducted businesses. However, as technology and the business environment have changed, its popularity has grown. It is a great tool for businesses both large and small and offers them a way to take advantages of more services at lower prices than they otherwise would. On the other hand, it is not without with its problems, and those doing it need to be aware of its drawbacks.

Why it has grown

Changes brought on by technology have provided a huge boost to outsourcing. For the first time in history, it is now possible to communicate and cooperate across the world at low or no cost. If the product can be provided digitally, distance simply does not have to matter at all. The internet is a great tool for bringing buyers and sellers together, and outsourcing websites allow people to post jobs for anyone in the world.

As technology makes the world smaller and international competition stiffer, outsourcing has become a virtually necessity for many businesses that never used it in the past. With outsourcing, companies can avoid the responsibility and costs of hiring as many employees. It also allows them to produce more without having to put money in new buildings, equipment and other overhead costs.

It also adds a lot of flexibility to production. If a company wants to experiment with something new, outsourcing often allows it to do so without having to make big fixed investments. This ability to experiment and change quickly is increasingly important as the pace of change speeds up.

The little guy

Corporations are not the only ones who can benefit. With the power of online marketplaces, it is now possible even for individuals to outsource to the world. Freelance websites allow people to post very small jobs at a nominal cost. Freelancers from around the world can then bid on the projects. This, in effect, levels the playing field for small businesses and entrepreneurs. Often, they simply do not have the time or expertise to do some jobs themselves. With modern outsourcing, they can access labor and expertise from wherever it may be.

A note of caution

However, outsourcing is not without its problems. It has a negative image in the minds of many as something destroying local jobs and can potentially generate bad publicity. There are other problems on a more practical level too.

Outsourcing necessitates the sharing of information. Depending on the business, this can potentially cause problems if the information gets into the hands of competitors.

Anyone outsourcing is also giving up a degree of control of the work too. While this can free a company up to concentrate on its core business, it can potentially cause problems. It is often very difficult to verify if the work is getting done as promised and nasty surprises can arise with both the timing and quality of the work. Outsourced employees will not have any loyalty to a company and less to lose if something goes wrong.

Those outsourcing work overseas are opening themselves to the most potential problems. Apart from being in different time zones, workers overseas many not have the same attitudes towards quality and meeting deadlines.

Overall, outsourcing still offers a lot of potential gains for the risks involved. If it was not a good tool, it would not be growing in popularity. However, those getting started in outsourcing are advised to proceed with caution and to test the waters with smaller projects first.