The Pros and Cons of Outsourcing


Outsourcing is a practice of hiring an outside company or individuals for a particular task or a project. Outsourcing helps organizations in a number of ways. It lets the companies focus on their core functions more effectively and efficiently. In other words, outsourcing is a process of hiring a specialized firm, agency, or an individual to do something that the company cannot do with its current resources.


An excellent example of outsourcing is Audit. Almost every registered business needs to get its accounts audited by the end of the financial year. While you can hire a specialized person in your firm, the cost will be a lot higher. There are specialized audit firms that can do the job better and at a lower price. The outsourced company is responsible for checking and rectifying mistakes in the accounts and keep the company up to date.

Therefore, almost everything can be outsourced. The main rule is to figure out the costs of the personnel you’re going to hire. Once you’ve calculated the cost, compare it with the cost of hiring people at your company. It will also take much of your time and a tedious recruiting process. In many cases, outsourcing is better, but sometimes it may not be the best for your company.


What are the Advantages of Outsourcing?

The well-planned outsourcing model implies a number of benefits for the companies who implement it, such as:

Cost Reduction

Outsourcing reduces the cost that could be spent on the process of advertising, hiring, and retaining the resource for a particular task or a project.


Production Process

Specialized companies can carry out the implementation of more innovative systems that add extra value to the product in the process.

Flexibility

One of the most significant benefits of outsourcing is flexibility and adaptability. With the advancement in technology, companies can now stay up to date with the latest trends in their preferred timings.


Effective Business Processes

Many companies choose to outsource those operations that are less important in relation to the percentage of turnover. In this way, they can spend more time and resources on their core competencies and let the outsourced company handle the rest.

Competitive Advantage

By following the latest trends and implementing those in the business through outsourcing, companies can gain competitive advantage, which somehow becomes hard with in-house resources.

Global Talent

With outsourcing, companies can enjoy the services of experts from all over the world without the need to increase personnel costs.

What are the Disadvantages of Outsourcing?

Many companies enjoy the benefits of outsourcing their services while it is not an ideal choice for all the industries out there because of the following drawbacks:

Communication

Communication with an outsourced team is not the same as with in-house employees. It results in misunderstandings, especially when you have outsourced a talent from another country, and there is a considerable time difference.

Delivery Issues

Sometimes, it’s hectic to follow up on the outsources company regularly. Hiring an incompetent outsource could result in late delivery as there is a lack of proper monitoring process.

Confidential information

Sources that you are hiring outside the business have access to the company’s sensitive data. It is essential to keep in mind that to transfer or give access to personal data; it is crucial to take into account the regulatory changes regarding data protection.

Quality

The quality of the outsourced services may be compromised sometimes. A company that offers outsourcing solutions works with different projects at the same time. Therefore, the level of attention is always lower than that of the companies that only dedicate themselves to your task or project.