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Organizations who are interested in outsourcing are often curious to know more about advantages and disadvantages of offshoring. By gaining insight about both the good and bad of outsourcing, organizations can decide if outsourcing is right for them. Most organization jump headlong into outsourcing, without actually finding out if outsourcing is good for their business. Before outsourcing, ensure that you are aware about the pros and cons of outsourcing.

The advantages and disadvantages of outsourcing can help your organization decide if outsourcing is right for your business. The following is a list of the advantages and disadvantages of outsourcing:


The Advantages of Outsourcing

  • Outsourcing your non-core activities will give you more time to concentrate on your core business processes
  • Offshoring can give you access to professional, expert and high-quality services
  • With outsourcing your organization can experience increased efficiency and productivity in non-core business processes
  • Outsourcing can help you streamline your business operations
  • Offshore outsourcing can help you save on time, effort, manpower, operating costs and training costs amongst others
  • Outsourcing can make your organization more flexible to change
  • You can experience an increased control of your business with outsourcing
  • Your organization can save on investing in the latest technology, software and infrastructure as your outsourcing partner would be investing in these
  • Outsourcing can give you assurance that your business processes are being carried out efficiently, proficiently and within a fast turnaround time
  • Offshoring can help your organization save on capital expenditures
  • By outsourcing, your company can save on management problems as your offshore partner will be managing the team who does your work
  • By outsourcing, you can cater to the new and challenging demands of your customers
  • Outsourcing can help your organization to free up its cash flow
  • Sharing your business risks is possible with outsourcing
  • Outsourcing can give your business a competitive advantage as you will be able to increase productivity in all the areas of your business
  • Outsourcing can help your organization to cut is operational costs to more than half

If you want your organization to stay ahead of competition, concentrate on core competencies and make use of the latest technologies, then outsourcing can help your organization achieve all this and more. In outsourcing, the advantages of outsourcing are more than the disadvantages of outsourcing. The pros of outsourcing have driven more organization to step into offshoring and experience the benefits that it has to offer.


The Disadvantages of Outsourcing

  • At times, it is more cost-effective to conduct a particular business process, rather than outsourcing it
  • While outsourcing services such as payroll processing services and tax preparation services, your outsourcing provider will be able to see your company’s confidential information and hence there is a threat to security and confidentiality in outsourcing
  • When you begin to outsource your business processes, you might find it difficult to manage the offshore provider when compared to managing processes within your organization
  • Offshoring can create potential redundancies for your organization
  • In case, your offshore service provider becomes bankrupt or goes out of business, your organization will have to immediately move your business processes in-house or find another outsourcing provider
  • The employees in your organization might not like the idea of you outsourcing your processes and they might express lack of interest or lack of quality at work
  • Your outsourcing provider might not be only providing services for your organization. Since your provider might be catering to the needs of several companies, there might be not be complete devotion to you and your company
  • By outsourcing, you might forget to cater to the needs of your valuable customers as your focus will be on the business process that is outsourced
  • In outsourcing, you may lose your control over the process that is outsourced
  • Outsourcing, though cost-effective, might have hidden costs, such as the legal costs incurred while signing a contract between companies. You might also have to spend a lot of time and effort in getting the contract signed
  • With outsourcing, your organization might suffer from a lack of customer focus
  • There can be several disadvantages in outsourcing, such as, renewing contracts, misunderstanding of the contract, lack of communication, poor quality and delayed services amongst others.

The disadvantages of offshoring give organizations an opportunity to think about what they are stepping into. However the disadvantages of outsourcing are less than the advantages of offshore outsourcing. When outsourcing, you might not experience any of these disadvantages of offshoring, if you find a reliable outsourcing partner. Before outsourcing take the interests of your customers and employees into consideration and then make an informed decision. If your organization is genuinely interested in outsourcing, let not the disadvantages of outsourcing stop you.
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