Five Pros and Three Cons of Outsourcing

Every business decision you make, including whether to outsource, has pros and cons

Key takeaways:

  • Outsourcing is hiring a third party to provide a service or take on a business process on your behalf

  • Pros of outsourcing:

    • Cost savings

    • Time savings

    • Access to expertise

    • Better service delivery

    • Access to technology

  • Cons of outsourcing:
    • Loss of control

    • Security risks

    • Concerns from employees

Businesses across industries continue to take advantage of outsourcing which can help their bottom line significantly. Many businesses cite cost savings as the biggest reason they do it. With any strategy comes downsides as well, however. This guide will walk you through what outsourcing is, the biggest pros of outsourcing jobs, and a few cons.

What is outsourcing?

Many businesses decide to outsource certain jobs or responsibilities instead of hiring an in-house staff member to do the job or giving the task to an existing employee. Outsourcing is the hiring of a third party to provide a specific service that is performed on behalf of the business. 

Remember not to confuse outsourcing with offshoring. Offshoring is when a company sends work to be performed in another country. Offshore outsourcing is a combination of both concepts, which many companies decide to do as well.

There are many reasons businesses outsource, which brings us to our pros and cons lists.

The pros of outsourcing

There are lots of benefits of outsourcing and more and more companies are turning to this strategy to get the help they need, whether they’re adding a new service or just need extra assistance getting everything done. Let’s walk through the biggest pros:

  • Cost savings: Often when you outsource to a third party, whether it is an individual contractor or a company, you pay a lot less for a service than you would by hiring a full-time employee and paying a salary and benefits. Labor costs can be cut significantly – sometimes even by 70 percent.

  • Time savings: Sometimes you and your team members just don’t have the time to focus on certain aspects of the business, like marketing or IT. By outsourcing these tasks, managers and business leaders can get back some of their time to focus on growing the business or improving client relationships.

  • Access to expertise: Similarly, if you find that your team doesn’t have the bandwidth, knowledge, or experience for certain business functions, outsourcing allows you to have help from the experts. Contractors and specialized businesses will have lots of expertise in the area that you’re hiring them for so you don’t have to worry about a steep learning curve or time for training and onboarding.

  • Better service delivery: You may also find that outsourcing helps you create a more efficient business and thus happier customers. Giving business functions to experts can quickly lead to better, higher quality services and the overall business can be more profitable when more efficient processes are in place.

  • Access to technology: Third-party contractors will also likely have technology or equipment to perform tasks that your business just doesn’t have. This helps you ensure your business is utilizing the latest innovations without having to invest in them directly.

There are a lot of reasons to outsource but these are the main benefits. For companies looking to save money and create a more efficient business, outsourcing can often provide just that; for business functions ranging from HR to marketing to IT to administration.

The cons of outsourcing

Now, what are the disadvantages? While there are lots of pros for companies of all sizes, it’s not necessarily for everyone. Here are a few cons to keep in mind:

  • Loss of control: When tasks are not being performed in-house, you may not have as much control over how they’re getting done. And, you do have to put your trust in the contractors that they’re going to hold up their side of the deal, including meeting deadlines and providing a high-quality product.

  • Security risks: Unfortunately, there are scammers in outsourcing just as there are foul players in any industry. Hiring a third party often means you have to share sensitive company information with your contractors so they can complete the work. This puts customer and company data at risk, especially if not handled properly. There are also scammers that pose as legitimate outsourcing companies, so make sure to fully vet who you’re working with before signing anything.

  • Concern from employees: Sometimes you may have to deal with in-house workers who have a lot of questions. They may be worried that their job is on the line if they learn that you’re outsourcing. They may not agree with your decision to do so. Just make sure you stay open about what’s going on to minimize confusion.

There are always ways to deal with these downsides if you do decide to start outsourcing to take advantage of all the pros. For example, you may need to tighten security on data you send to contractors and make sure that they only have access to what they need to have access to. 

Why work with Doxa7?

When you need expert outsourcing services look no further than Doxa7. We help small and medium-sized businesses gain the resources necessary to compete with larger companies and help them set up strong offshore teams to improve and enhance processes. Doxa7 adapts to your needs and wherever you are in the growth process. We make sure people are always treated as assets, helping you create a better, more positive organization overall.

To learn more about our business process outsourcing services, schedule a free consultation today.

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