11 Pros and Cons of Outsourcing You’ll Want to See

May 6, 2020 1145 views

The Pros and Cons of Outsourcing

Outsourcing is the process of hiring an outside company to perform services that are usually performed in-house.

It started in the ’80s and became more popular in the ‘90s and has become a part of many business strategies practiced today.

Outsourcing can refer to sending work overseas or within your country. I’m not going to focus on keeping jobs in the country or not (you can find this discussion in the resources section of this page.)

I would rather focus on how outsourcing can benefit your business as well as the issues that arise when you outsource.

The Pros of Outsourcing

1. You Can Work Around the Clock

When you outsource, especially when you are in different time zones, your work can continue around the clock; another party can work as you sleep. This speeds up what you can accomplish in the time you have available without the need to add extra shifts and staff.

2. You Can Reduce Overhead Cost

Overhead costs needed to run a business can be reduced. As a simple example, suppose you run a news-related website, and you hire a writer.

In addition to your writer’s wages, you need to provide a computer, desk, chair, phone, office supplies, etc. All these are overhead costs. When you outsource, you cut these costs because you pay a flat rate.

3. Savings on Taxes, Insurance, and Benefits

When you outsource, you don’t pay any of the costs related to payroll tax, unemployment insurance, insurance premiums, or benefits packages; you pay these expenses when you have a full-time employee.

4. Free Up Your Time

When you outsource, you give instructions, specifications, etc., and you should get the results you asked for. You don’t need to be bothered with any of the fine details or with project management.

You can move on to other issues that are important in your business. How much more could you accomplish if you outsourced 3–4 of your most time-consuming tasks?

5. Get Expertise Without The In-House Costs

IT services require an expert to deal with many of the computer and network problems faced by small businesses.

If you were to hire an in-house specialist, you might not have enough work to keep him or her busy, and the cost may not be worth it. Outsourcing IT services will get you expert help and advice without the added costs.

6. You Can Simplify Project Management

When you outsource projects, you reduce the need for management. For example, let’s say you run an assembly line for a product.

If you were to make each part required to assemble the final product, you would need multiple lines and machines, and you would need employees, managers, and supervisors.

If you were to outsource the process of manufacturing those parts, you would simplify the entire process and could focus on the final assembly.

Cons of Outsourcing

7. You Lose Some Control

When you’re involved with internal projects, you have full control. When you outsource, you give the specifications and wait for the result, at which point it may or may not be what you expected. When you’re doing the work in-house, you can make changes and tweaks as needed and as you see fit.

8. There are Security Risks

For example, if you are developing a top-secret product and outsource the production of that product, you may run the risk of your producer leaking some details.

For example, an employee could be fascinated with the idea and talk to some friends about it. One of those friends mentioned it to their friend, and that friend happened to be part of the management of your competitor. So, even though the breach wasn’t intentional, it did get out. Anything to do with trade secrets should not be outsourced for security purposes.

9. Quality of Work

When you work in-house, you have control over the quality of work. When you outsource, the quality may not be there, and you may need to go through a few different providers to find the quality, and you will need to keep up the level of standard.

Another consideration is some providers don’t dedicate staff to your order. They may have hundreds of employees, and your order may be processed by someone different each time, and the product may vary in quality from order to order.

10. Missed Deadlines

Sometimes you have deadlines, and some providers may not prioritize your work as needed. They may have a bigger client that is their number one priority, or their work ethic may not be as strict as yours, and this is where critical issues can hurt if you outsource them.

11. Things Get Lost in Translation

Not all your providers may be fluent in your language, and a lot of the instructions may get lost in translation. This is a big problem because even with clear instructions, you may not always get what you asked for, and this is one of the downfalls of outsourcing.

You’ll find more issues to consider in the following resource section that I’m sure you’ll want to spend some time on.

Resources: A Collection of Hand-Picked Articles Delivering Important Information About Outsourcing

You’ll find a lot more about outsourcing in the resource section included in this post. The articles are provided by a variety of authors, and that is a benefit because you’ll receive an overview of outsourcing from different perspectives. Take the time needed to go through the resources to get the most knowledge.

You may want to bookmark this page so you can return anytime you need the information because it’s a lot to take in from one sitting.

Sections In This Post:

How to Outsource

The Entrepreneur’s Guide of Outsourcing Work Without Losing Quality

Build a Better Business with Outsourcing – How to Outsource – Entrepreneur.com

Strategic Ways To Outsource, And When To Do It

The Outsourcing Handbook a Guide to Outsourcing

The Ethical Implications of Outsourcing

Is Outsourcing American Jobs Wrong?

(PDF) The ethics of outsourcing: when companies fail at responsibility

The Morality of Outsourcing | Kyle Marvin

How to Outsource Effectively

5 Keys to Effective Outsourcing | Inc.com

15 tips how to effectively manage outsourcing company

15 Essential Outsourcing Tips for Better Decision Making

Parts of Your Business You Shouldn’t Outsource

4 Projects Entrepreneurs Should Never Outsource | Intelligent Office

Outsourcing: When Not to Outsource

5 Things You Should Never Outsource (and 5 You Should) – CBS News

Parts of Your Business You Can Outsource

6 Business Tasks You Could Be Outsourcing

101 Tasks You Can Outsource to Virtual Staff

Outsource these 98 Tasks to Virtual Assistant Services Today

Most Commonly Outsourced Services

Positive and Negative Effects of Outsourcing

Positive and negative impact of outsourcing | My Essay Point

The Unintended Consequences of Outsourcing

(PDF) The Impact of Outsourcing on Business Performance: Insights for Employers

The Pros and Cons of Outsourcing

The Pros And Cons Of Outsourcing

Pros and Cons of Outsourcing – Flatworld Solutions

The Pros and Cons of Outsourcing – SmartAsset

The Pros and cons of outsourcing | BDC.ca

17 Primary Pros and Cons of Outsourcing – Vittana.org


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