Outsourcing is mainly a process where one company contracts some of its work to another company. In other terms, one company contracts another company to provide services that might otherwise be carried out by internal employees of the company. A very easy example is the call center industry and freelancing writing; most companies outsource such jobs to companies in countries where it would cost them less. So basically outsourcing is done to save money, besides other reasons, which will be discussed in this article. However outsourcing allows companies to focus on main business issues while the minor details are handled by external experts.
This saves organizations from burdening their in-house management with extra and needless responsibility to focus on more important issues. Companies that handle outsourced work are specialized in their fields and their work is usually streamlined, these companies come with world-class capabilities and have access to new technology which the outsourcing companies couldn’t afford to buy or deemed as an extra expense. For example, it would cost much less for a company to outsource its payroll service to other companies on contract basis than get extensive manpower and technology to do it on a monthly basis. Many of the companies who provide outsourcing services do it considerably for lesser money as they have fewer overhead expenses. Outsourcing is also now being interchanged with the word off-shoring, when in fact that shouldn’t be the case. When you say you’ll outsource something that means you will have a role or task done outside your company, it can be within your country or outside. When you say off-shoring, it is outsourcing something outside your country.
Reasons for Outsourcing
Most organizations that outsource are basically seeking to address some of the following issues.
o Cost saving
o Focusing on core business
o Restructuring costs
o Improving quality
o Accessing talent
o Enhancing capacity for innovation
o Venture capitalism
o Risk management
o Tax benefits
o Operational expertise
Advantages of Outsourcing
Some of the man advantages of outsourcing are that it is a reasonable way of cutting costs if the company providing the outsourcing service is reliable then companies can also save costs on clients. Outsourcing is also a means of providing jobs and ability to make good money along with the flexibility to work as a freelancer.
Disadvantages of Outsourcing
Some of the disadvantages of outsourcing are that it often eliminates direct communication between a company and its clients which leads to poor relationships between companies and customers. Also there companies cannot control some aspects of its outsourced projects and this leads to delay in deadlines and project implementation. In some cases companies become dependent on upon it’s outsource providers, which leads to certain problems such as provider backing out of the contract or delayed feedback etc.
In the end I would just like to say that “Everyone’s experience is different on outsourcing, but there is always a negative & positive experience. Outsourcing should not be used if the sole reason is to save money, but because it makes sense in the long term process of becoming successful in ones project or daily task. Thus before outsourcing one should consider analyzing company needs and requirements to that prove that outsourcing will lead to be a benefit. So it is not just the cost one should consider, but who they outsource the work to. Remember this is just one scenario and it is important to consider ones own variables prior to choosing to outsource or not.”