Whether you are a small-scale company or a large-scale enterprise, this is a question that needs to be asked. There are many reasons a company chooses to outsource, but before we get into this let’s talk about what is outsourcing and the advantages and disadvantages of outsourcing.

Outsourcing

Outsourcing means allocating a specific part of a business function or process to an external resource. This practice has grown a lot with companies outsourcing a variety of business functions such as bookkeeping, customer service, sales, recruiting, IT, support, and more. There are many advantages and disadvantages of outsourcing, let us discuss some of these.

Advantages 

Let’s talk about the top 5 advantages of outsourcing:

 

1. Expertise

Your company may be very good at sales but not that great with customer service. Or maybe your IT department does not have the expertise that you require for a certain project. These are the cases where hiring an external expert makes the most sense. By outsourcing specific tasks you can be sure that you have experts in all functions of your business.

2. Cost 

Another major advantage of outsourcing is cost reduction. When you hire an internal resource, there are a ton of costs involved right from interviewing, hiring, training, salary, insurances, infrastructure and travel allowances. By outsourcing you can avoid almost all of these, you can save up 70% of the cost, especially is you outsource overseas.

3. Time 

By outsourcing specific tasks you can get your projects done much faster as instead of an internal resource working on it, you will have a dedicated external resource. The external resource will not be affected by any downtime or public holidays you have. They can work according to your time zone or the timings you require.

4. Risk-Sharing 

Risk-analysis is one of the most crucial factors in the success of any project. By outsourcing, you can shift some of the responsibilities to the external vendor.  You would normally outsource to a vendor that is an expert in their field, now they are the ones who will plan and mitigate potential risks for you.

 

5. Focus 

Not everyone should work on every function, by outsourcing supporting functions and tacks like; IT or customer service, your team would have more time and freedom to focus on their strengths and on improving the core process. This, in turn, would increase your business.

Disadvantages 

We have read about the top 5 advantages; now let us talk about a few disadvantages:

 

1. You lose some control

As the external resource would not be working at the same location as you, it would tough for you to know how the assigned tasks are being carried out and monitored. This is not a major drawback though, as this can be taken care of by hiring trusted external resources. There are also many tools available like TimeDoctor that helps you track when and where your resource is working,

2. Risk of data theft 

When you hire an external resource, you need to share a lot of details with the, sometimes this information is confidential and private and you don’t want this to be leaked. This issue can be avoided by hiring an outsourcing vendor that signs NDA’s for every project.

3. Lack of understanding 

Whether you hire an external resource that lives across the street or one from an overseas outsourcing company, there needs to be a clear understanding between the client and the resource. Unfortunately while transmitting information over the phone or email there are times when things are missed, this may cause time delays and additional costs. To avoid this you should work with an outsourcing firm that has topnotch project managers and sublime reporting.

 

Conclusion 

After going through the advantages and disadvantages of outsourcing, you would agree that the advantages overshadow the disadvantage by far.  You should choose to outsource if you are looking for experts, looking to save costs and time or just looking to make your business more flexible. However you need to make sure you outsource to the right vendor, so do checks, go through case studies and references and lockdown on the outsourcing vendor.