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

Ryan O'Bleness

I am looking to hear from our community! Do you think outsourcing is a good idea, or bad? What are the pros and cons? 

ross03

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

ross03

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

Rick Anderson

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.

Tom Adams

> @"Ryan O'Bleness" said:
> I am looking to hear from our community! Do you think outsourcing is a good idea, or bad? What are the pros and cons? 

Pros of outsourcing:
1. Massive Financial Savings
2. Extremely Diminished Cost
3. Access to Highly Proficient and Systematic Team
4. Rapid delivery time
5. Tremendous focus on chief sectors
6. Acquiring Robust Versatility
7. Lowering mighty risks

eurus

Outsourcing is a growing trend. Here are the key reasons I can think of:

One Stop Shop Benefit

Web development has many dependent tasks. If you go ahead and hire a developer with on particular expertise, chances are he will need help from others. For example, when client comes with requirements, it needs to be properly translated into development tasks by the project manager. Then that should be reflected in design by the designer. Front end and server side development need separate people. Hiring all of them directly is time consuming. You will have to know the ins and outs of development.

The Specialization Benefit
Outsourced firms are specialized. There are some obvious benefits to specialization. My team has completed 5 projects so far. It has worked with other organizations from 6 countries for the last 4 years. We have gone through the learning curve and know what clients want and how we can deliver it. That is why outsourced projects tend to finish earlier compared to in house projects.

The Cost Benefit

The application development cost in North America and Europe is higher than that in South Asian countries. That is partially because cost of living is lower in South Asia. 

Steffi Dsouza

Hi @Ryan I hope now you will have better knowledge about advantage and disadvantage of  Outsourcing.
If are planning to Outsourcing I have some point which will make you much better understanding about this field.
Outsourcing can provide a number of long-term benefits:
1.Control capital costs
2. Increase efficiency
3. Reduce labor costs
4. Start new projects quickly
5. Focus on your core business

Disadvantages of Offshore Outsourcing

1. One of the biggest disadvantages of outsourcing is the risk of losing sensitive data and the loss of confidentiality.
2. Losing management control of business functions mean that you may no longer be able to control operations and deliverables of activities that you outsource.

borntorule

To my mind, outsourcing has only positive points and I am sure that you will get only the advantages while outsourcing any of your activity. However, what you should pay attention to is the level of the company which provides you the services and you should be 100% sure in them (I mean you can check their rating, or somebody has recommended them to you)

Lukejeff

Benefits are more when compared to disadvantages. Pro's : 1) Can choose the right experts available in the market. 2) Can approve the quality of output or get it worked till we achieve it with out spending own time or money. 3) Operational costs, employee costs are much lower when compared to permanent in house employees. 4) delegation of responsibility and be stress free. Cons : 1) lack of understanding of organization standards, culture, marks etc 2) data security.
The first one can be easily outdone by providing a simple training for the managers to make sure of the components required in outcome and data security by outsourcing to ISMS certified companies like Habiliss , Keane India, Accenture, Cranes Software, Aztecsoft, Microland, etc.

McCandless

There are many advantages and disadvantages of business process outsourcing as discussed below:

Advantages of Outsourcing:

There are many advantages of Outsourcing as explained below:

1. Improve your Productivity:

BPO saves time and helps the executives to explore new revenue areas, accelerate other projects and focus on their customers. This leads to improvement in the productivity of any organization.

2. Ideal utilization of the resources: There is an ideal utilization of the resources. BPO enables best utilization of scarce resources. Outsourcing helps to capture new efficiencies and transfer the resources. This increases the efficiency and productivity. Availability of skilled employees and implementation of sophisticated technologies leads to utilization of resources and productivity.

3. Reduction in costs: Cost saving is the major factor driving the need to outsource. BPO helps in reducing overall operational costs of business organizations and boosting all over business profits.

4. Focus on core business functions: Outsourcing document scanning and data entry work to reliable BPO firms often permits more time for business professionals to involve in core business activities, thus generating new income streams. Back office outsourcing also helps business enterprises focus more on customer care, sales and market.

5. Suitable Utilization of time: Business Process Outsourcing is very crucial for saving time and obtaining outstanding services within strict deadline.

6. Refined technology at lower costs: Technology is the leading area of business process outsourcing. Investing in new technology is essential to keep pace with the latest innovations and solutions. Thus outsourcing to companies that have the resources, expertise and desire to continuously update their technological solutions, offers a true advantage.

Generally, the advantages of BPO are very similar to those of outsourcing in general. As the most flexible form of outsourcing, business process outsourcing can bring benefits but involves larger limitations and a smaller scope of application.

Disadvantages of Outsourcing:

There are also some disadvantages of outsourcing as discussed below:

1. Lack of customer focus: An outsourced retailer 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.

2. Hidden costs: While outsourcing is considered cost-effective, there are some hidden costs. So before passing an assignment make sure to have the detailed contract paperwork.

3. Risk of revealing confidential data: When an organization outsources HR, Payroll and Recruitment services, it contains a risk of exposing confidential company statistics to a third-party.

4. 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

So it is necessary to know the advantages and disadvantages of business process outsourcing before ensuring any task to an outsourcing service provider.

Equate the nature of services offered by various business outsourcing service providers and indicate to a BPO firm that you feel that you can meet your specific wants.

jimmy johnson

Well this discussion is really helpful thanks for sharing

dwk061000

The challenge in working with VA's or outsourcing work is just figuring out what should be outsourced... Generally anything that's more menial and takes up time but is relatively easy to do should be outsourced IMO.

If it's complex, you're not going to get quality work unless you pay a lot for it.

ross03

I think this can help you

Ryan O'Bleness

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

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. 

Ryan O'Bleness

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. 

Tom Adams

Ryan O'Bleness said:

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'Bleness

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. 

Roshni

Thank you all for your information . it is really give good knowledge. As per me if we outsource our payroll then it is very beneficial we can able to handle accounting, income tax return easily.