Reasons Why Outsourcing Can Be Good Or Bad For You

Reasons Why Outsourcing Can Be Good Or Bad For You

Outsourcing has become a global trend for quite some time now and is steadily gaining popularity with business owners of all kinds. Choosing to outsource a business is not limited to manufacturing sectors and IT industries anymore. Many small & medium enterprises with brick and mortar stores are also jumping on the bandwagon of offshoring.

However, before you decide to outsource your bread and butter business, consider the pros and cons of this approach to determine if this path to uplevel it is the right choice.

Why Outsourcing Can Be Good For Your Business

Outsourcing has gained popularity because it offers many benefits to business owners as stated below.

You Don’t Need To Hire More Employees

Business owners have more freedom to choose and delegate their workloads to remote employees, freelancers or contractors on an hourly or per project basis. Thus avoiding to hire a local, in-house individual with full-time benefits and training, consequently saving a lot of money and time.

Freedom and Access To A Larger Talent Pool

There are plenty of third-party platforms that you can tap if you want to outsource talented and expert remote workers. Upwork.com, Fiverr.com, Freelancer.com, People per Hour and OnlineJobs.ph are some of the budget-friendly outsourcing platforms out there. While large company owners or corporations prefer partnering with outsourcing companies to achieve their target goals.

Reduced Labor Cost

The prime reason why many large companies down to small business owners choose to outsource their business is the cheap labor costs compared to hiring in-house local individuals who you need to provide with full-time benefits, training, equipment etc. These help them cut down their business recruitment and operational costs. You often get the same quality of work output with less pay because of outsourced experts in that field.

You Help People From Other Parts of The Globe By Hiring Them

Business offshoring has contributed to the world’s economic development and lowers the unemployment rate of the third-world countries. Philippines and India are among the top 5 nations for Foreign Direct Investments like Call Centers and Back Office operations. The industries have alleviated the living conditions of workers residing in these parts of the globe.

Your Business is Open 24/7

Outsourcing your business results in increased sales and productivity because you can operate 24/7 with your teams taking shifts while you are sleeping or getting a break during the weekend.

Why Outsourcing Can Be Bad For Your Business

In any situation, it is practical and wise to weigh the pros and cons before arriving at a decision. So let’s dive deep into these disadvantages of outsourcing which might be bad for your business.

Loss of Managerial Control

If you outsource your business, be prepared to lose management control because you be giving or sharing the authority with another entity to perform the tasks or functions of an entire department. By willingly handing over the reins of management and control, you expose your business to risks like the assumption that your outsourcing partner has the same drive, passion and standards to achieve your goals and mission.
Sometimes, this can break your business.

Communication Issues

Key points summary: The language barrier is a real struggle for your business if you are outsourcing to foreign shores. Make sure to choose efficient, fluent, bilingual workers or outsourcing partner companies.

Foreign countries with English speaking workers have a different time zone. It is one factor to consider in outsourcing especially if you need to communicate at an agreed time to discuss work functions and submission of their deliverables.

What is the medium of communication- phone, email, chat or instant messaging?

Is the outsourcing entity’s internet service provider has reliable connection speed?

Do power outages always occur with your outsourcing company or worker? What backup do they have?

Problems With Quality

Outsourcing can also be tricky with quality and quantity of output or accomplishments. You need to use a time tracker or monitor the progress of a project or task. It may lead to several revisions back and forth until the work is entirely acceptable to you. It is crucial to have a contract for added protection in case of missed deadlines, failed project output or half-baked results.

Confidentiality and Security

Passwords, entry to files and systems as well as strategies for your business’ core operation is your lifeblood to keep it afloat. Be prepared to address the risks and take necessary precautionary measures, and backup them up with conditions stipulated in the contract between you. Non-Disclosure Agreement is definitely a must for protection.

In any business decision, you take risks so better weigh the pros and cons of any strategy including outsourcing a function or your whole operation. Before deciding, always consider the impact it will bring to your company culture like existing operations and the morale of your local workforce because this can be bad or good for your business.