To most entrepreneurs with conservative mindsets, outsourcing work might appear to be reducing towards any potential of future employment opportunities. This perspective is not entirely true because outsourcing work is a mutually-beneficial decision for all parties involved, it is just surrounded by a stigma of sorts. While outsourcing jobs could have some negative effects on company culture, it remains a popular business process. In this article, our focus will be on the effects of outsourcing in business and what positives and negatives you should take into consideration before deciding to outsource an aspect of work from your business.
What is Outsourcing Work in Business terms mean?
Outsourcing is a business process of contracting of non-core activities and duties to a third-party provider. So, a commercial facility manager outsources when he hires a contractor to provide janitorial services. However, outsourcing consultants are often hired for payroll, accounting, and human resources (HR) jobs in corporate environments. One of the common methods that manufacturers use in promoting outsourcing is by asking third-party agents and contractors to handle their logistics. However, outsourcing is not recommended for all lines and industries of work. For example, it would never be recommended to outsource positions like anything to do with nanny services or more specifically someone with the responsibilities of a household manager. This type of work requires a personal touch and for those selecting the person who fills the position to be able to make a connection with the potential employees. It would more likely to recommend outsourcing of work to those who work in manufacturing and distribution. If a company needed a hand in the manufacturing of art crates for shipping purposes or just for local art storage, I would highly recommend outsourcing this work to some experts in construction.
What are The Cons?
Looking at the definition of outsourcing, we can see how it concerns non-core services. However, entrepreneurs should avoid the pitfalls of outsourcing their business activities. Before promoting this growing trend, it is imperative to weigh the pros and cons. You might observe the following disadvantages of outsourcing work and decide to take yourself in another direction, far away from outsourcing.
Outsourcing certainly creates a loss of control over the affairs of work activities. When non-core tasks are outsourced, it is the third-party agent’s responsibility to manage them. During projects executions, the outsourcing agent can deny your company the opportunity of influencing the job. Imagine having to manage a team of individuals all around the world, this is what outsourcing can be. It’s a challenge you will be faced with and there really isn’t many answers to it, more often than not you will have to learn to adapt to all of the different time-zones and languages spoken. It will begin to take a toll on your body and mind.
Also, outsourcing might be a bad idea when clients can not make critical decisions. Instead, when outsourcing contractors sign some terms of agreement with the clients. Some of these terms might include keeping close tabs on the progress of the project, and regular meetings. However, it is the contractor’s prerogative to grant access to the project documents. If these are challenges you feel you might struggle with as a business owner, consider taking some employability skills or vocational training to further your ability to deal with this kind of work. Alternatively, outsourcing may not be for you and your company.
Violation of Terms and Conditions (T&C’s)
Outsourcing your company’s non-core activities might expose some confidential information that you never thought even existed. Many companies do not permit their management team to outsource non-core activities. Even with non-disclosure agreements, third-party contractors violate the T&Cs of projects. They could divulge sensitive information about their clients or use them selfishly for their own personal gain.
Reduces the Opportunity for Employment
Many people think that outsourced projects deny potential employees from getting jobs. While their opinions are valid, we also know that third-party agents use their employees to execute these projects. However, outsourcing of non-core activities is a transfer of responsibilities from the client and their employees to another company. It takes away a reason for a current employee to strive and work harder for that potential raise and promotion, keep this in mind.
What are The Pros?
After outsourcing an activity, the client often looks forward to successful completion. Usually, the management of these activities is a shared responsibility. You might observe the following advantages of outsourcing work.
With the flexibility of choosing what non-core activity to outsource and what to keep in-house, it is easy to schedule official duties. Usually, staff members in the finance department are busy during tax and auditing periods. Any other financial operation can be a huge responsibility and burden. The company’s management might choose a flexible process of outsourcing to reduce inefficiency. This strategy allows your company to handle the demands are expedient. This is the first of a few strengths of outsourcing.
It is genuinely Cost-Effective
It is cost-effective to hire an outsourcing company because your one-time payment covers any additional resources. Instead of spending huge resources on employees to complete the task, the outsourcing agent will be happy with a regular fee for a fixed period. So, it is relatively cheap to hire a competent third-party agent than employees. Also, these agents want to prove a point by completing your project without delays. That is most often the most thought about positive of outsourcing, it saves quite a bit of money initially and doesn’t cost much to continue the service.
Access to Expertise
Outsourcing your official functions to agents is an opportunity to learn from their expertise. Usually, an outsourced company has a team of professionals that have acquired relevant experiences. They form a pool of talents looking for projects. It will be a great idea for your employees to learn more and tap from the resources of these experts.
As you can see, there are endless factors to take into consideration when contemplating outsourcing a certain aspect or task of your business. Although we won’t discourage anyone from thinking about outsourcing, it always important to keep your current employees in mind as they may be able to complete the task you need and you will have to reward them deservedly. Outsourcing is a good resource for business of all sizes, it isn’t something that you should jump into and you should seek any potential business advice you can before leaping into it.