Outsourcing has many pros and cons. However, this is natural because every business endeavor or solutions has its own advantages and disadvantages. The key is how to leverage the pros of outsourcing in order to neutralize or even eliminate its cons or disadvantages.
First, outsourcing is an effective cost saving measure. It significantly reduces expenditures and lower in-house operational cost. By outsourcing business segments and operations, companies can save on resources that will be devoted to wages, technology solutions, IT infrastructure, energy requirements, and technical expertise. Companies can also increase their productivity through outsourcing.
Offshore outsourcing makes it possible for companies to manufacture and deliver products and services for twenty four hours. This is especially true if the offshore location operates on different time zones. So production and deliveries will not stop without paying additional overtime pay to workers. This significantly enhances productivity and profitability. By freeing resources and staff efforts, companies can concentrate on improving their main business functions. This could raise the standards and quality of their higher end business operations.
On the other hand, outsourcing entails risk such as loss of control for some business operations. Through outsourcing, some company trade practices can also be compromised thus losing an advantage over its competitors. The local labor market is also highly disgruntled by companies outsourcing their business processes. This could lead to labor unrest at the home front which could be very detrimental to the company s operations.
Before deciding to outsource, companies are generally advised to weigh their options if the benefits of outsourcing will be greater than its disadvantages.