Outsourcing can be very beneficial for companies to reduce costs, access to expert workforce, and flexibility of workforce. There are obvious advantages of outsourcing and some disadvantages as well for few businesses.
Disadvantages of Outsourcing
- When you outsource a project there is dependency on the outsourcer. You loss control of the ownership of the resource as compared to in-house resource.
- You have to provide exceptionally detailed specs for the project detailing everything, validation rules whether simple or complex, list of all the technologies and the devices you want your application or website to work. It is a difficult task because if you miss anything and want to add later, outsourcing company will charge you more for extra features.
- When you outsource services like payroll and tax preparation, outsourcing company has access to all the confidential data about your company.
- There are sometimes conflicts due to lack of communications like renewal of contract, misunderstanding the contract terms and delayed in services.
- You are bound to outsourcing company for future updates and if a job goes bad, it is almost impossible to get it fixed by different company.
- In outsourcing, you are not able to deliver the message properly to the customers. Outsourcer sometimes interpret the message for effectiveness.
- Sometimes outsourcer assign junior workers to make big profits from the contract. It decrease the quality of output.
- When you focus too much on costs, reports and terms of the contract, outsourcer lose focus on the project goals and it may lead to failure of overall project.
- There are often hidden costs that you often assume included in the contract. The cost of overall project is much higher when you consider little aspects of the contract.
- There are times when outsourcer neglects you because they have received a payment or found a bigger project than yours.
- The main advantage of outsourcing is cost reduction because costs such as social security, health care and worker compensation are eliminated. It is the responsibility of the outsourcing company to take care of all the expenses of outsourced resource.
- In addition, you get the experts of the industry to work for you. The cost of hiring an expert in-house resource is eliminated when you outsource.
- You don’t have to worry about managing the resource directly. You can spend that time in your business to gain advantage. You will receive all the reports and updates that you can review weekly in your spare time.
- When you outsource the work to a company, you will likely to get an added advantage because of high competition. Outsourcing company will try to provide the best resources that are experts and efficient. It will save you a lot of money in comparison to hiring a resource in-house.
- There are different types of options in outsourcing like project based work or hiring a remote worker for your business. In project based work, you only pay for reaching pre-defined mile-stones. Hiring a dedicated resource will help you eliminate the miscellaneous costs like space utilization, utility expenses and compensations that are required by law.
- Outsourcing Company will do their best to keep you satisfied with the work and performance. They provide priority support and updates to their clients to keep the business.
- When you outsource, you don’t have to hire for long-term. Outsourcing is a perfect option when you have a project based work or one-time project that needs work for certain time. You can end the contract when your project is completed without any penalties.
- There is more risk when an in-house employee leaves the job because you need to hire a new resource and follow the procedures from the start. In outsourcing, it is not your headache when a resource leaves the job because the outsourcing company will provide a replacement.
- You can start new projects easily when you hire the right outsourcing company. It will save you cost and get the projects completed on time.
- You can re-hire the services when needed because your outsourcing company knows about all the technologies used in your project.
Things to Remember when Outsourcing
Outsourcing can be a wise decision for your company to save the costs of hiring a resources in-house. All you need to decide is why you need to outsource? Keeping in mind the objective of outsourcing will help you reach your goals. It is best to have an understandable contract with outsourcing company to avoid conflicts. All the terms and conditions should be pre-defined to make sure that the outsourcing company delivers what was defined in contract.
Research before Hiring
You will hear a lot of bad stories about outsourcing went bad. For making the outsourcing successful you need to do a thorough research on your requirements and the outsourcer capabilities. You can ask for references from previous clients, testimonials and portfolios to determine the quality of outsourcer. Good outsourcing companies provide complete portfolios and client references on your request. In rare cases, you will find mixed opinions about the company. You need to communicate with the company to understand their capabilities for managing outsourced business.
The main reason for bad outsourcing experience is communication. Remember, the outsourcing company will perform only the predefined tasks every week. You need to follow-up and check the progress in order to have a successful long-term commitment. It will help you and the outsourcer to better understand your business needs.
Understanding the Technology
Understand the terminology and working of technology before you assign it to outsourcer. When you dump all the responsibilities on the outsourcer for some work that you don’t understand, it leads to dissatisfaction because the road-map and objectives are not directly addressed.
Difference in Opinions
Remember, the word outsourcing has different meaning to everyone. If you are living in a community where people lost their jobs because of outsourcing, they will speak and exaggerate how worse it could be. Similarly, if you are living in an area where people are benefited from outsourcing, they will tell you number of positive points about outsourcing.
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