Pros and Cons of Outsourcing
By Rick Fulks
Before you start outsourcing business operations, you should consider pros and cons of outsourcing. Often outsourcing is a way to save money, but there can be unexpected costs as well. The decision to oursource is certainly not one that any organization should enter into lightly.
Pros and Cons of Outsourcing: The Good
Possibly the most well known reason to consider outsourcing is to access cheaper labor. Workers in developing countries are paid far less than workers in developing countries due to the lower cost of living. Often these workers are not unionized as well, which further helps with cost cutting.
Cut Operating Costs
Even though your outsourced work must be paid for, often the costs are cheaper than if your company performed the operation itself. Lower salaries are a part of this benefit, but it goes much deeper. For example, each employee you don't working on site means one less computer you need to purchase and maintain. It also means that you spend less money on electricity to power the computer. The savings can be enormous depending upon your business operations.
Lower Labor Training Costs
Training new employees is expensive. This is especially the case in high turnover jobs such as customer service call centers. Each new employee may need one to three weeks (or more) of training before being able to start working. In addition, there are materials to create and trainers to hire. When you outsource your customer service call functions, the outsourcing firm takes care of all this.
Access to Better Technology
If you have a small business, you probably can't justify having all the latest technology for every employee. It just costs too much. An outsourcing firm, however, likely can afford the latest technology since that is part of their core business.
You can have employees working on site 24 hours a day. However, it is harder to attract talented employees to work less desirable shifts. This is no longer a problem with outsourcing. Your company can provide service 24 hours a day, with workers around the globe operating in the best shifts available.
Focus on Core Business
Chances are your company has something it does really well. It is the reason the company began in the first place. To run a business, however, requires skill in many different operations. Some of these operations take the focus away from what you do best. Solve this problem by outsourcing so you can focus on your core business.