What are the effects of Outsourcing?

What is Outsourcing?

Outsourcing is the process where one organization's work is assigned to another company or organization in order to maximize the quality of service yet keeping the cost at the minimum. This process can be done for a certain task or for the full fledge services which are offered by an organization. Like any other business process or model it also has its pros and cons which are to be considered when outsourcing the work. 

The overall effects of outsourcing are dependent of the industry and the business segment which is outsourced. But in general outsourcing is done to enable organizations to generate more profits and have a competitive edge in the market. As we all know that no organization will adopt this business model with ill intentions but still there are some negative effects which may cause the quality of service or products to go down or increase a delay in the delivery of the products. Having said that if we take a look at the bigger picture most of the times outsourcing has done great for companies whether they have undertaken this process to increase productivity whilst keeping the cost low by outsourcing their manufacturing department to another company in another country or they have hired some specialists to provide support to their customers through live chat, phone support or email support.

Effects of Outsourcing; Pros & Cons

Outsourcing is mostly done to give competitive advantage to an organization by appointing some agency or another business to conduct the business on organization's behalf enabling the outsourcer to enjoy the benefits of low labor cost, enhanced quality and better development. Now this may show one side of the picture but on the other hands people responsible for outsourcing are the ones who are in constant pressure to make sure everything is done on time and every process is completed as it is suppose to be to avoid any shortcomings at the end. The best way to understand this whole process is to take a look at the Pros and Cons of outsourcing.

Pros of Outsourcing:

ü  Better ROI and increased revenue

ü  Cost Effective

ü  More room for innovation

ü  Better quality of service and products

ü  Maximum utilization of resources

ü  Enables management to engage in core functionalities and generate business rather than getting stuck in day to day operations.

Cons of Outsourcing:

~        Lack of control

~        Issues with delivery time and quality of product

~        Lower ROI compared to expected results

~        Trouble adjusting in foreign culture and accent based issues for support services.

Based upon these above mentioned Pros and Cons of outsourcing it is always in the best interest of the company to analyze their situations before taking a decision to outsource their services. They should consider all the possible outcomes positive and negative before giving control of their customers to another company or agency. Instead of just looking at the low cost they should also consider to maintain the level of service which is expected and received by their customers.