‘Outsourcing’ is the transfer of operations & business activities to any other company or to a different business environment or group. The company takes the option of outsourcing of their activities. Simply, so that they can manage their in-house activities more properly. An example of outsourcing of services that takes place very regularly is the Call Centre Outsourcing. Many businesses these days go for the option of outsourcing. This to manage their business functions more properly and in a standardised way. However, it has got both Pros and Cons, depending on the type of businesses.
This is particularly because outsourcing creates an environment of specialised professionalism that is necessary for the businesses to grow. If you or your business is a new setup lacking some operational efficiency in terms of certain aspects. Therefore, the best option is to go for the outsourcing of services. Importantly, to another business entity or specialised group and give them their share of operations. Some other examples of outsourcing includes payroll outsourcing. Something, that helps in calculations of monthly payrolls for a company with tax deductions and annual tax calculations. It’s the primary concern of the company to satisfy their clients and make accurate calculations of Salary payable. Most of the companies that go for the option of outsourcing their salary calculations for employees manage a large number of work force. Therefore, the key reason is to solve data handling issues and transfer the operations to a more specialised firm.
There are many Pros and Cons related to outsourcing in the business world. However, most of the time outsourcing is found advantageous. More importantly, as it solves many complex business issues. This is also in relatively quick time and can prove to be a worthwhile long term solution.
ADVANTAGES OF OUTSOURCING SERVICES:
There are many Pros associated with the outsourcing of services. Furthermore, these advantages help in deciding what’s best for your business. Some of the Pros are discussed below;
YOU DON’T HAVE TO HIRE MORE EMPLOYEES:
When it is not needed, hiring more employees isn’t necessary at all. It’s just like spoiling your own budget and expanding your expenses. While outsourcing your services you are acting as a contractor and you can pay or help as one. This is the thing that can save money for you. Also, allows you to avoid bringing more employees into the company.
In simple words it is something that will be highly advantageous. Particularly, in terms of the savings point of view and for having a sustainable advantage. Primarily, because first you need to monitor and hold your operations rather than increase your work force.
ACCESSING A LARGER POOL OF TALENT:
It is the biggest advantage that a company enjoys. That is, they can have an access to a larger pool of talent. In terms of the specialisation of services and the accessibility aspects, the services will be better dealt with. The biggest examples are again Call Centre & Outsourcing the payroll services. While hiring an employee or maybe two may only have access to a small, local talent pool. On top of this, it will be a huge drawback in terms of managing the budget of company properly.
LOWERING THE LABOUR COST:
One of the biggest advantages that companies enjoy regards to the outsourcing of services. Ironically, is lowering the labour cost to a very substantial figure. This is particularly if as a company you are outsourcing your services to another country. A geographical location with cheaper rates in terms of the work force. An example is outsourcing of Call Centre operations from a Dallas based company to Bengaluru, India. The significant amount of savings is a huge advantage. Hence, for the company outsourcing its services.
Despite the huge number of advantages or Pros that are associated with outsourcing of services and operations. There are some disadvantages or Cons as well that are of prime concern.
DISADVANTAGES OF OUTSOURCING SERVICES:
COMMUNICATION ISSUES:
The biggest disadvantages or cons includes having communication issues with the third party. Obviously, while you are acting as a contractor. Hence, and the service provider is your intermediary client. Therefore, you need to be more precise and clear what needs to be the deliverable. More importantly, regards to what the company is looking for. There is a possibility that there can be some communication issues regards to this scenario. The other problems that arise in outsourcing of services is the difference in time zone. More often, due to different geographical locations.
LACKING CONTROL:
As a company you are looking for directions from another company while you are outsourcing. This means that you are transferring some part of your control to that particular company. Hence, the only disadvantage or a con that can arise is lacking control. Since the company is not the same one. Hence, it can be highly difficult to maintain the level of control that is desired. Another example is the Call Centre & Customer Support.
HAVING QUALITY ASSURANCE ISSUES:
A major problem that can arise is having issues of quality assurance while managing the operations big time. This means it can be a huge challenge for the company with the outsourced services. Mainly, to manage and monitor the activities and operations of the original company. To overcome these challenges training is a prerequisite, which definitely requires a decent amount of budget and maintenance of activities.
The issues of quality assurance can at the end of the day create a bad name for the original company. Hence to have a proper impact of outsourcing activities, the better deal is managing quality assurance the same way.