What Are The Advantages And Disadvantages Of Outsourcing?

Advantages of Outsourcing · 1. Cost Savings: · 2. Increased Efficiency & Expertise · 3. Focus on Core Business Processes · 4. Reduced Operational, ... Skiptocontent WhatAreTheAdvantagesAndDisadvantagesOfOutsourcing? Home>News>WhatAreTheAdvantagesAndDisadvantagesOfOutsourcing? WhatAreTheAdvantagesAndDisadvantagesOfOutsourcing? PostedonFebruary4,2021February8,2021byadmin 0 Outsourcingisa growingbusinesstrend thathasproventobequiteeffectiveforbusinesseslookingto reducecostsandincreaseproductivity.Outsourcingmundaneandlowprioritytaskstooff-shorecompaniesoftencutcosts,expandscapacity,andincreasesgrowthinmanybusinesses.Thisarticletalksaboutthe advantagesanddisadvantages ofoutsourcing.Moreimportantly,itdiscussesinstanceswhereoutsourcingmaybe beneficial forabusinessandcasesinwhichitcoulddomoreharmthangood.Whenacompanychoosestooutsource,thereisnolongeraneedto investtimeandmoney intoinfrastructuredevelopment.Instead,theycanusethatinvestmentmoneyon marketingandR&D,whichismoreinlinewithcorebusinessprocessesthatleadtoprovidinghighervalue-addedservices. AdvantagesofOutsourcing Thereareseveraladvantagestooutsourcingnon-corebusinessactivitiesasdiscussedbelow: 1.CostSavings: Outsourcingbusinessprocessessuchascustomersupport,accounting,administrationalongwithHRrelatedactivitiescanleadto substantialcostsavings.Thisismainlybecauseoff-shorecompaniesincountrieslikeIndiaandthePhilippineshavemuch lowerwagerates thanthoseofthewesternworld.Thesecountriesalsohavefewerrestrictionsontaxesandaregenerallycheapertooperate,whichtranslatesto costsavings forinternationalorganizations. 2.IncreasedEfficiency&Expertise Specifictasksareoutsourcedtocompaniesthatspecializeinthatrespectedfield.Forexample,HRtasksforrecruitment,payroll,andschedulingcanallbedoneoverseasaslongastheorganizationspecializesinHRproceduresandisawareofallthebusiness’spolicies.Thiscanleadto increasedefficiencyaseachtaskisoutsourcedtocompaniesthatspecializeexclusivelyinthatrespectedfieldordepartment. 3.FocusonCoreBusinessProcesses Outsourcingnon-revenuegeneratingtaskssuchasadministrationandcustomersupportfreeuptimetofocuson revenue-generatingbusinessprocesses thatcanincreaseprofitabilityandboostsales. 4.ReducedOperational,InfrastructuralandRecruitmentCosts Outsourcingdepartmentsfreesup spaceandsavesonhiringstaff,purchasingofficeequipment,computersystems,andrentalfees.Apartfromthis,day-to-dayoperationalcostsarealsoreducedasthecompanynolongerhastoinvesttimeandmoneyintoinfrastructuredevelopment,employeetraining,orrecruitment.Theseresponsibilitiesarenowtransferredovertotheoutsourcedvendorresponsibleforhiring,training,andmanagement. 5.Risk-Sharing Whenanorganizationoutsourcesspecificcomponentsofbusinessprocesses,theyalso shiftresponsibility associatedwiththoseprocessesovertotheoutsourcedvendor.Theyarenowresponsibleforalltherisksrelatedtothatprocess,andsincetheyarethespecialists,theycanbettermitigatethoserisks. DisadvantagesofOutsourcing Althoughtherearemanyadvantagestooutsourcing,therearealsoseveraldisadvantagesthatacompanymustconsiderwhendecidingwhethertooutsourceabusinessprocessornot?Herearesomedisadvantagesofoutsourcingthatanybusinessshouldbeawareof: 1.RiskofExposingConfidentialCorporateInformation The riskoflosingsensitivedata andthelossofconfidentialityisperhapsthemostsignificantdisadvantageofoutsourcingbusinessprocesses.WhenoutsourcingdepartmentslikeHRorcustomersupport,thethirdpartyhastobeoftendisclosedtoconfidentialdatathatcaneasilybestolenorsenttothewronghands.Corporationstake intellectualproperty quiteseriously,sohavingfoolproofmeasuresandchecksregardingdatalossandconfidentialitycontractsisamustwhen negotiatingoutsourceddeals. 2.ServiceDelivery Onceabusinessprocessisoutsourced,feedbackandreportingoccuronaweeklyandsometimesdailybasis.Thismaynotbeenough,especiallyifthedeliveryfallsbehindscheduleorqualityisbelowexpectations.Measurescannotbe implemented asquicklyasitwouldbeifthedepartmentwereoperatingin-house. 3.InstabilityofOutsourceCompanies Ifanoutsourcingcompanygoesbust,sodoestheentire businessdepartment foryourorganization,leadingtodevastatingoutcomes. 4.LackofCustomerFocus Outsourcedcompaniesoftenworkwithawidevarietyofclientsandcatertothe expertise needsofmultipleorganizationsatatime.Thiscanoftenresultinunderwhelmingresultsonorganizationtasksasoutsourcedvendorsmayquickly losetrackandfocus. Conclusion Althoughcost-effective,off-shoreoutsourcingbringsaboutitsownsetof challenges thathavetobecarefullyanalyzedbyanybusinesslookingtooutsourceitsnonessentialbusinessprocesses.Thesechallengesmaypresentthemselvesintheformofhiddencosts,languageandculturalissues,poorquality,andreducedcustomerfocus.Choosingwhetherto outsource orremainin-houseisakeydecisionthatcanoftenmakeorbreakanorganization. Source:https://www.completecontroller.com/ Related LeaveaReplyCancelreplyYouremailaddresswillnotbepublished.Requiredfieldsaremarked*Comment*Name* Email* Website Savemyname,email,andwebsiteinthisbrowserforthenexttimeIcomment. MathCaptcha −2=8 Notifymeoffollow-upcommentsbyemail.Notifymeofnewpostsbyemail. 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