What are the Benefits of Outsourcing? What are the Disadvantages?

Ryan O'BlenessRyan O'Bleness Birmingham, Mich. Posts: 605administrator Site Admin
I am looking to hear from our community! Do you think outsourcing is a good idea, or bad? What are the pros and cons? 
Ryan O'Bleness
Community Moderator
StartupNation, LLC

Best Answers

  • ross03ross03 VietnamPosts: 14subscriber Bronze Level Member
    Accepted Answer

    The Advantages:

    1. Swiftness and Expertise: Most of the times tasks are outsourced to vendors who specialize in their field. The outsourced vendors also have specific equipment and technical expertise, most of the times better than the ones at the outsourcing organization. Effectively the tasks can be completed faster and with better quality output
    2. Concentrating on core process rather than the supporting ones: Outsourcing the supporting processes gives the organization more time to strengthen their core business process
    3. Risk-sharing: one of the most crucial factors determining the outcome of a campaign is risk-analysis. Outsourcing certain components of your business process helps the organization to shift certain responsibilities to the outsourced vendor. Since the outsourced vendor is a specialist, they plan your risk-mitigating factors better
    4. Reduced Operational and Recruitment costs: Outsourcing eludes the need to hire individuals in-house; hence recruitment and operational costs can be minimized to a great extent. This is one of the prime advantages of offshore outsourcing

  • ross03ross03 VietnamPosts: 14subscriber Bronze Level Member
    Accepted Answer

    The Disadvantages:

    1.Risk of exposing confidential data: When an organization outsources HR, Payroll and Recruitment services, it involves a risk if exposing confidential company information to a third-party
    2.Synchronizing the deliverables: In case you do not choose a right partner for outsourcing, some of the common problem areas include stretched delivery time frames, sub-standard quality output and inappropriate categorization of responsibilities. At times it is easier to regulate these factors inside an organization rather than with an outsourced partner
    3.Hidden costs: Although outsourcing most of the times is cost-effective at times the hidden costs involved in signing a contract while signing a contract across international boundaries may pose a serious threat
    4. Lack of customer focus: An outsourced vendor may be catering to the expertise-needs of multiple organizations at a time. In such situations vendors may lack complete focus on your organization’s tasks

Answers

  • Ryan O'BlenessRyan O'Bleness Birmingham, Mich. Posts: 605administrator Site Admin
    edited February 13
    Thank you for your insights, @ross03, I appreciate it. I agree with you that outsourcing to experts is an efficient way to get something done properly yet quickly, and that is allows you to focus on the core of your business operations. I also agree that you may be compromising confidential information and that the business doing the outsourcing work likely has not done proper research on your target audience and customers. 

    One disadvantage I would add is that if you're offshoring your work to another country, you are taking away jobs from your fellow citizens and not contributing to the economy. It's essentially choosing to save a few dollars over creating more jobs. But I understand that in certain situations it may be absolutely necessary. 
    Ryan O'Bleness
    Community Moderator
    StartupNation, LLC
  • Rick AndersonRick Anderson Posts: 2subscriber Member
    When hiring virtual assistants for outsourcing, you can either choose them from freelancing sites or from outsourcing companies (some outsourcing companies don't provide VAs, instead they will take your project and then complete - this is suitable for projects but if you want to have a VA who will help you day to day, this doesn't work). Both has certain pros and cons. If you go for freelancing sites, the sites will cut a significant amount of money from the project. Also, they can suspend or cancel your project, often, without or for very silly reason, though it is solely business between you and the assistant. Also, there is no supervisor of the assistant, so you will have to monitor the activities of the VA. This is a problem when you don't have enough time to supervise the VA and this may lead to quality compromise. Also, in most of the sites, the minimum wage rate is fixed(often high for the type of the job you want to get done) and therefore although the VA want to work on cheaper rate, you won't be able to do so in most cases. Also, as almost all freelance VA works from home, they don't have sufficient infrastructures like good internet connection and computer system and therefore works get hampered when emergency situations take place like powercut.



    On the contrary, when you hire VAs from outsourcing companies, you will deal with the company owner and the VA will get your work done. As a result, although you will directly communicate and get work done by VA, you will not always have to monitor the quality of work since the company supervisor will ensure this for you. Also, there is no middleman between you and the company and you will always have the opportunity to negotiate. Only issue with the outsourcing company is finding the reliable and trustworthy company that provides the exact service that you need among thousands (many of them are just time wasters)

    When I started my food delivery website, I needed to upload nearly 100 restaurant menus.After considering all pros and cons of both freelancing sites and outsourcing companies, I decided to go for outsourcing style. So I was searching for low-cost outsourcing companies. India is standing top in the rank of outsourcing industry. so I decided to try an outsourcing company from India. After hours of online research, I found a company called Staff India who directly provide virtual assistants. They provided me 5 VAs that I had to pay for this project and thus the project was completed fast. But I didn't have to communicate with them all the time, I just communicated with the supervisor couples of times and he ensured the project goes smooth. I was very pleased with their service and since then I always get my projects done by them. So, my experience with outsourcing company is satisfactory.



    Great post, Indeed! Anyone who is interested to outsource some of his task, must know these facts. However, the key is to find a great outsourcing service provider. In that case recommendation from someone, maybe a friend, who has outsourced his work to the provider and got it done successfully is vital. For example, last year I was searching for a low-cost data entry service provider for my small project. One of my friends recommended me Staff India as he did business with them earlier and was satisfied. So, I got my project done by them too and I am really pleased with their service. Especially their supervisor was very communicative and sincere. I like their whole process of business.
  • Ryan O'BlenessRyan O'Bleness Birmingham, Mich. Posts: 605administrator Site Admin
    edited March 31
    I appreciate the feedback, @Rick Anderson. Good analysis between freelance work and outsourcing. Let's just be careful about Company plugs/promotion, as we don't want to appear like we're spamming the community.  :p
    Ryan O'Bleness
    Community Moderator
    StartupNation, LLC
  • Ryan O'BlenessRyan O'Bleness Birmingham, Mich. Posts: 605administrator Site Admin
    Thanks, @Tom Adams. There are many pros to outsourcing, but there are some cons, too: hidden costs, not being able to manage the project your way, possible security threats, not ideal response time, quality of products, etc.

    I think outsourcing works well for certain projects, but it may not always be the best decision. I think advantages and disadvantages need to be considered each time outsourcing is on the table. 
    Ryan O'Bleness
    Community Moderator
    StartupNation, LLC
  • Tom AdamsTom Adams Posts: 17subscriber Bronze Level Member


    Thanks, @Tom Adams. There are many pros to outsourcing, but there are some cons, too: hidden costs, not being able to manage the project your way, possible security threats, not ideal response time, quality of products, etc.

    I think outsourcing works well for certain projects, but it may not always be the best decision. I think advantages and disadvantages need to be considered each time outsourcing is on the table. 


    Thanks @Ryan O'Bleness for your answer. Yeah, I agree with you and I also think that each type of business can its pros and cons and the real entrepreneur should be critical and analyze the situation well in order to make the right decisions
  • Ryan O'BlenessRyan O'Bleness Birmingham, Mich. Posts: 605administrator Site Admin
    Thank you for your insights @Steffi Dsouza. It is interesting to compare and contrast the advantages and disadvantages and see which one outweights the other. 
    Ryan O'Bleness
    Community Moderator
    StartupNation, LLC
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