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It is important for any business to understand outsourcing pros and cons before committing to this arrangement. Outsourcing is a basic term used when one company hires a third-party company to do a portion of their work for them. Typically, the work that is outsourced is tasks at which the first company does not have expertise. An example of this would be an insurance agency hiring out their janitorial work to a housekeeping business or a large corporation hiring out to an overseas call center. This article will take a brief look at some disadvantages as well as advantages of this arrangement.
First, there are some real disadvantages. Of course, the most commonly noticed problem is that of poor representation to one’s customers. Many consumers feel that outsourced work is done at a lower quality level than non–outsourced work. However, this is typically a simple matter of stigmatization. Some real problems occur when the primary company gives up some of its control to a third party. At this point, a contract is drawn up; some of these contracts can be filled with fine print and hidden fees. In addition, some businesses feel that they are losing some of their company confidentiality with outsourcing.
Most businesses feel that the advantages of outsourcing far outweigh the disadvantages. The major benefit is a large increase in cost-effectiveness. Typically, work that is outsourced consists of tasks at which the primary company is not an expert. Therefore, the third party can take care of these tasks at a faster speed. This also allows the company to focus more on their core business. Companies that choose to send their work to a different country often find that the cost for work outside the United States is much lower than work done domestically. Of course, countries that receive outsourced work also benefit when more of their citizens are employed.
Outsourcing typically works for the greater good of everyone involved. This also includes the customer who is receiving products or services at a lower cost and at a faster speed than they would otherwise. However, every business needs to look at both the advantages and the disadvantages of this option before coming to a final decision.
The most important thing to consider is how much is it costing your business by not outsourcing? You need to be working on your business as much as possible, rather than in it.