Advantages of Outsourcing

Outsourcing has many advantages including:

• Allows a business to focus on core activities
• Streamlines a business' operations
• Gives you access to professional capabilities
• Shares the risk
• Piece of mind that the process is in good hands (reliability)
• Do not have to worry about continually introducing new technologies
• Improves service quality
• Frees up human resources
• Frees up cash flow
• Increases the control of your business
• Makes the business more flexible to change (i.e. demand)

Disadvantages of Outsourcing:

However, outsourcing does have its disadvantages:

• The fear of the service provider ceasing to trade (bankruptcy, etc)
• You may lose control of the process
• Creates potential redundancies
• Other companies may also be using the service provider. Therefore in some cases, the best interests of the service provider may be diluted with other users
• You may lose focus of the customer and concentrate on the product (the outsourced process)
• The loss of talent generated internally
• Employees may react badly to outsourcing and consequently their quality of work may suffer

Many of the disadvantages can be avoided if you research the service provider and you do not regard outsourcing simply as a money saving scheme - this is not always the case.

Consequently, you should be certain that you have a valid reason for outsourcing and that you intend to liaise regularly with the service provider to avoid loosing all control of the process.

However, the disadvantages are valid reasons why not to outsource - it is therefore a common case of weighing up the pros and the cons for your particular situation.