Pros and Cons of Outsourcing and How it Fits Different Business Types

pros and cons of outsourcing

Outsourcing is nothing new. IT, Manufacturing, support, accounting, marketing, and more have all been using outsourcing as a way to improve and face pros and cons of outsourcing.

Because of the advantages of outsourcing, it doubled in value since 2000.

pros and cons of outsourcing

By evaluating pros and cons of outsourcing, we can see that it isn’t some magic pill which will make difficult work disappear.

People have mixed opinions about outsourcing – It’s time to find out whether outsourcing is really a good fit or not.

Should you outsource or not?

 

4 simple questions can solve this dilemma for you –

 

i. Do you have the enough resources?

 

One of the biggest advantages of business process outsourcing and general outsourcing is being able to use knowledge and resources outside of your own workforce.

So, rather than having to hire a full-time team member or lease a facility to manufacture a product, you can just outsource the jobs when you need to.

If you’re confronted with a task which your full-time team does not have knowledge or understanding of, and/or means to complete it, then you need to ask yourself how often the task will come up.

 

ii. Do you have the time to do it?

 

If your team is already chockablock with responsibilities for the next three months, probabilities are that you won’t have the time to complete yet another item on the batch.

For example, if your team is stressed with their assignment, and there is one thing in particular which needs more time than the other ones, that’s your main contender to outsource.

This isn’t just about having time for new jobs; it’s about whether your time can be better spent doing other things. This leads us to the next question…

 

iii. Do you have to do it?

 

Some of the optimum tasks to outsource are ones which require little unique input from your company/culture.

You don’t need to make your company’s data entry or handle your lead generation? Someone else can do it.As with the previous question, this should include tasks you enjoy doing.

 

iv. Is there any security issue?

 

The final factor when considering business process outsourcing is the security risk attached to the task.

If the nature of your work contains sensitive information, then you have to be careful about what you are giving your partner to work with. But it is not a deal breaker and it can be easily handled.

 

4 major activities you can outsource easily –

 

1. IT and web development tasks

 

You may have noticed how quickly software and hardware become outdated in this industry. How is one staff person going to keep up-to-date with everything?

Software development outsourcing gives you the benefit of having more than just one IT professional. And since it’s the essential capability of the company, they can give you sound guidance to put your dollars to work for you.

 

2. Marketing tasks

 

Of all the business activities, marketing outsourcing is the most interesting one. Unfortunately, many businesses hold back on marketing, thinking that they can do it on their own.

If you don’t have the abilities/experience to do marketing, you should outsource marketing activities to a skilled agency.

Two major aspect of marketing –

 

  • Social Media Marketing – Social media marketing clearly gives your product or service’s value proposition and convinces probable customers that you provide the best solutions for their needs.

 

  • Online Marketing – Online marketing consists of SEO (optimizing your website content to drive targeted prospects to your website), getting your site listed on appropriate directories (Yelp, Google Places for Business, Yahoo Local Listing, etc.), setting up and managing Google Adwords campaigns, creating YouTube videos, managing social media profiles and campaigns (LinkedIn, Twitter, Facebook).

 

3. VR Assistant

 

Virtual assistants are people who perform tasks for you from a distant location. Allocating administrative or time-consuming tasks to a virtual assistant through outsourcing, which can save significant time from your busy schedule.

Tasks that you can outsource to virtual assistants:

  •         Sending out newsletters
  •         Booking travel arrangements
  •         Mailing out birthday or holiday cards to your customers
  •         Scheduling appointments
  •         Doing online research
  •         Managing voicemail and email
  •         Creating Excel spreadsheets

 

4. HR activities

 

When you outsource HR functions, some facilities go with the “all-or-nothing” approach, requiring that they handle all your HR activities or none at all.

Typical services include:

  •         Payroll administration: handle taxes, Produce checks and vacation time.
  •         Employee benefits: Health, Medical, Life, cafeteria plans, deal with sick time etc.
  •         HR management: Recruiting, hiring, and firing. Also background interviews, exit interviews, and wage reviews.
  •         Risk management: Workers’ compensation, dispute resolution, safety inspection, office policies and handbooks.

 

20 Successful companies that outsource on a regular basis

  1. Slack
  2. Alibaba.com
  3. Fab
  4. Skype
  5. AppSumo
  6. Staff.com
  7. Github
  8. Basecamp
  9. AlertBoot
  10. MYSQL
  11. SeatGeek
  12. UpWork
  13. Squawker
  14. JPay.com
  15. Splunk
  16. Opera
  17. Axeda.
  18. Cloudmunch
  19. Proximate Global Inc.
  20. Google

 

Pros and Cons of Outsourcing

 

Outsourcing Benefits  

 

1. Gaining Skills and Expertise

 

Understanding your clients along with their behaviors and thinking process is the heart of marketing. Being able to measure these principles creates fruitful campaigns.

These tasks require skills and expertise. Imagine: To create an excellent promotion, you need to have a copywriter, graphic designer, social media expert, strategist, IT specialist and more. None of the startup or small companies have that many expert employees.

 

2. Accessing the Tools of Technology

 

Outsourcing not only brings talent and proficiency to the table, it helps you with special toolboxes. Up-to-date tools, effective implementation, track and obtain the best IT and business process results.

Working with an outsourcing firm lowers the cost of software and other tools. Plus, you have access to a professional who is trained to employ the instruments and has the experience of using them daily.

 

3. Bridging the Knowledge Gap

 

Sometimes the skills and expertise required in IT projects create a knowledge gap.

Rather than playing catch-up or using trial and error, outsourcing firms offer the expertise to fill the gap between what you know and what you need to know. This know-how offers certain backups and protection from a serious fall.

 

4. Redeeming Time

 

Time proves an essential commodity for business growth. Hiring an outside agency saves time. By saving time you are saving money. It is that simple.

Outsourcing marketing efforts:

  • Increases profit from current plans due to focus.
  • Frees business owners to concentrate on other efforts.
  • Creates efficient marketing campaigns that get results.

 

5. Saving Money

 

Providing staff with extra tasks drains their energy, creativity and productivity.

For instance:

  • Employing a skilled person draws a large price with the added costs of benefits, taxes, space, etc.
  • Hiring an on-site IT or marketing team increases these expenses.
  • Money spent on software and technology adds up. These tools can be expensive.

 

6. Protecting the Daily Flow

 

Business involves a certain quantity of time and energy daily to keep it moving. Additional projects or campaigns can interfere with this activity. But some of this work is essential for moving your business forward, but you have no space in your day to begin such a task without harming another area.

Your outsourced team works with you to generate a strategy based goal for your business and performs the plan outside the daily flow. You now have the best of both worlds.

 

7.    Creating Focus

 

While multitasking is cool, the truth is that each of us proves more effective when focused. Taking benefit of our strengths also increases efficiency.

As a businessman, collaborating with an outside agency frees you to focus on the areas you are skillful at and the tasks you need to get done.

 

8. Facilitating to Ongoing Needs

 

The ongoing process of web development and business jobs needs frequent upkeep, reporting and correcting for the best results. This is not a one time job. In addition, keeping up with modifications and updates in the technology world is vital.

Cutting edge strategy is the capability of outsourcing firms. Outsourcing these tasks brings reassurance.

 

9. Maintaining Flexible Release

 

Hiring an IT or marketing expert on staff gets tricky. The need for oversight and the rising job performance subjects create clumsy and costly resolution.

In the instance of outsourcing, if the association proves rocky or the consequences do not pan out, simply move onto another company. Also, since these companies tend to work per project, you have the flexibility to increase or decrease their roles.

 

10. Generating Fresh Ideas

 

An outsourcing firm can give you new and fresh viewpoints. While they may have knowledge working with others related to your niche, they are not ancient in it like your team is currently.

This outsider standpoint provides value to your business, making you stand out in the noise. While you are bright and savvy, we all know that too much time in the same arena dulls our senses. Outsourcing awakens our thoughts again and pumps life into the business process.

 

Outsourcing Cons

 

1. Security risks

Of course, outsourcing has a degree of security risk associated with it. At the same time, the right safety measures can take the bite out of this risk.

 

Solution

As I said before, the best way to do outsourcing is to draw up agreements or contracts before outsourcing to protect your information.

You can also limit to less sensitive information. Either way, it’s best to check the past of the outsourcing company. Yes, it sounds like a no-brainer, but it’s a vital point.You can do this by finding reviews and feedback from former clients.

 

2. Lack of complete control

 

It is a major point among pros and cons of outsourcing. This is both exciting and frightening thing for companies to wrap their head around.

This is an idea that needs to get rid of if you want your business to be profitable – you’re not superhuman, and you can’t handle everything by yourself (or even with your in-house team).

Here are some tools to help you communicate with your team better –

Ø  Time Doctor

Ø  WorkiQ

Ø  Asana, Jira

Ø  Slack

Ø  Discord

 

3. Lack of quality control

 

One of the major fears with outsourcing is that you won’t get what you pay for.

Articles can be plagiarized, accounts manipulated and other things can happen. Unfortunately, when this occurs your company will take a smash as a result. But there are tasks that offer no risks and gives you exactly what you are paying for. I am talking about web development and business process outsourcing, marketing these sort of tasks.

 

Solution

Your manager can keep a check of your track list in real time to make sure everyone knows what they supposed to do on a project.

Then, if you want to check on their improvement, you just have to re-open the checklist to see which tasks they have marked as complete.

Not only that, you can see an overview of all of the checklists which have been run, including which are still in pipeline, who is assigned to them, and what steps are yet to be completed.

 

4. It’s harder to build organizational culture

 

It can mean two things –

  1.              You may not be as tight-knit as you thought

or

  1.             Supportive of one another as if you were all in-house.

 

Solution

 

This problem can be controlled easily by giving those new employees a trip of your company. You can give them a short update or training about what type of behavior you want from them and the essential things they have to remember.

 

5. Language or accent barrier

 

This is a problem mostly with jobs which need writing or spoken language skills – you may well find in these cases that outsourcing abroad is not the best idea. But there are both pros and cons of outsourcing.

For instance, if you’re outsourcing a call center for an English or American company, the accent of the employee responding has to be clear and precise, so that western customers can understand.

 

Solution

 

First of all, not every outsourcing task faces this problem and this is not an issue in web development or business process outsourcing. Then again you can always find proficient workers who will meet your requirements because outsourcing is a big industry in Bangladesh, India and in other Asian countries. The substitute, however, is to hire the required staff in-house.

 

Bottom Line

Outsourcing your business activities may bring a bit of trembling at first and can take some time to get used to. However, this long-term investment proves to be one with minimal risk. Beginning with one project offers you an idea about the market and working relationship with an outsourcing agency. If you like the results move ahead, if not then move on.

There are both pros and cons of outsourcing, but the numbers of pros overpower the cons. After all, you increasing the output of your workforce by giving them time to do their core tasks, freeing your mind to pursue more business plans, planning and problem-solving and generating fresh, current ideas and strategies.

 

For more information head over to OrbitInformatics.

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