Companies should adopt a planned approach towards outsourcing and take into consideration the interests of employees, customers and vendors and come up with a reasonable plan.
Outsourcing has many advantages but at the same time if not conducted properly can have major disadvantages that cannot be disregarded.
Advantages of Outsourcing
- Concentrate on core competencies
- Gain access to foreign markets
- Stimulates trade and actually creates a stronger economy
- Achieve cost reductions - companies can save up on operational costs and can cut their operating costs to half by outsourcing
- Obtain expertise- from outside the organization; companies can get access to better technologies at a lesser cost
- Reduced labor cost- companies can access cheaper and more efficient labor and cut up on labor training cost
- All round quality- Improve the quality of services, efficiency and productivity
- Vendor expertise—the outsourcing vendor has years of experience in providing this type of service to the industry and can help you get started quickly and offer experienced ideas.
- No staffing concerns—you don't need to staff up the vendor bears the overhead of maintaining a trained staff to run the business.
- No new equipment—no additional computers or office equipment of any kind. The outsourcing vendor should provide the technology needed.
Disadvantages of Outsourcing
- Companies can get into serious difficulty if the vendor refuses to finish work due to bankruptcy, lack of funds, labor etc
- The company may loose control over its process as outsourcing requires the control of the process being transferred to the vendor.
- Outsourcing won’t overcome bad management
- A threat to staff morale, current employees in the company may feel threat due to outsourcing and may not work properly
- The attitude of people in the developed countries against companies that outsource is generally negative
- Companies that are dealing with trademarks, or classified information outsourcing may put their work and privacy in peril