About 15 years ago, the concept of outsourcing was fairly unheard of in the business society. As of today, it has become a widespread custom that allows companies, both big and small, to focus on income-augmenting activities and core competencies. Then again, like any other field of business, companies will surely come across a number of outsourcing pros and cons.
These days, “outsourcing” has become a standard term in the media. This is mainly because of the fact that numerous big companies are reaching out to countries like China, India and several other nations in order to take advantage of low-wage employees. Although various types of businesses have resulted to large sums of saving by subcontracting activities to overseas workers, the majority of outsourcing endeavors are not worldwide in nature.
Companies typically outsource a wide array of functions. Some of the commonly outsourced business activities include human resources and payroll management, call center operations, technology, public relations and marketing, and housekeeping services. Most of the time, tasks that call for special skills, legal know-how, or regulatory expertise are well suited for outsourcing.
As far as strategies go, outsourcing could be viewed as a good and cost-effective business solution. Of course, the different functions should at all times depend on the nature of the business, its core competencies, and its goals. In addition, well-supervised companies that aim to do things right yet could not afford to employ payroll specialists, compensation experts, senior-level human resource directors or lawyers usually acknowledge the importance of accessible professionals.
The collective advantage of outsourcing rests in the fact that it allows businesses to cut down on operating expenditures, as well as training costs. As a result, companies have more time and resources to focus on core competencies while improving their level of productivity. Access to cheaper and better technologies is also made possible. On top of that, companies can keep up with the competition without spending a fortune.
End-users in developed nations also derive benefit from outsourcing in the sense that they’re able to get hold of cheaper, high-quality products. Aside from that, they’re also provided with excellent customer service without the added cost.
The opposite end of the outsourcing spectrum reveals a somewhat different story. Companies that decide to outsource various business functions can also get into hot water with their service providers due to a variety of reasons.
Outsourcing calls for control over the activities being outsourced. This means that companies may need to partially or totally relinquish jurisdiction over a certain area or areas of the business operation. Conflicts between the owners and service providers are expected to arise with this type of setup.
Another issue that company owners need to factor into the equation is the possible effects that outsourcing may have on their own employees. The looming prospect that they might lose their jobs due to outsourcing may drive them to not function properly.
The different cons of outsourcing are the reasons why businesses should think thoroughly before contracting with a service provider. A planned approach should be implemented on the subject of outsourcing. It should also consider the interests of clients and employees alike.
Outsourcing pros and cons should, therefore, be weighed up before deciding to jump onto the bandwagon. The advantages should always be greater than the disadvantages so as to get the maximum benefit of outsourced services.