Pros and Cons of Business Outsourcing

Posted by Sharon Baneey in Outsourcing

Outsourcing is the process of selecting a company’s business process to an external agency in enhancing the quality service, driving innovation or driving benefits of the lower costs. When outsourced to the company’s located in the other countries, outsourcing takes the form of offshoring, also called offshore outsourcing. Effects of outsourcing Across industries, outsourcing is undertaken to enable to generate better revenue. While done with the good intentions, outsourcing has the effect on quality of the products and the services delivered as a consequence, either lowering or the enhancing the quality. While there could be a decrease or increase in the turnaround time while outsourcing, it could also result in the improved customer service. Outsourcing is undertaken to provide the companies a competitive edge, also lead to easier management and better productivity based on how the process is managed. Pros and Cons of Outsourcing Outsourcing is undertaken to provide the enterprise advantage by delegating business process to the external agencies and realizing the benefits of labor, better quality, and innovation. While this provides a good picture of the coin, most of the managers, however, need to cope with the possible shortcoming of the process and the impact on the company’s process. To analyze the opportunities presented, it is important to reflect upon the advantages and disadvantages of outsourcing. Pros of Outsourcing The benefits of the outsourcing often reflected by the organization across all the industries include: A better realization of the revenue and returns on investment. Lower cost of labor and increase in economics scale. Tapping into knowledge for better innovation. Free management time, enabling companies to focus on the core competencies while not being concerned about the outsourcing activities. Increases speed and quality of the delivery of outsourcing activities. Reduces outflow of cash and optimizes resources utilization. Cons of outsourcing Following are some of the possible disadvantages: Loss of control over company’s business process. Issues related to quality and time. The shortcoming in performance expectations. Realization of benefits and results lower than expected. Irate customer base coupled with enlarged employee...