Outsourcing as a process is defined by delegating the organizational work to other companies and entities that are located within or outside the country. This outsourcing has been followed holistically after the 1990’s before that outsourcing was not as widespread as it is today. However, once it has caught speed, outsourcing has been extensively used by organizations across the world to increase work efficiency, reduce operational costs and diversify their portfolio. Any organization can outsource their business process in a number of platforms and areas including IT related services, manufacturing, administration, and human resources among others.
However, the real question is whether the whole outsourcing process benefits the organization, or it is harmful to them.
Benefits of Outsourcing:
- Flexibility:With business process outsourcing you can diversify your portfolio and along with it the scope to focus on some specific and more important area increases. The business working expands, and more can be done with less capital, human resources, and area.
- Problem-solving: It is not possible that you can gain prowess in every process that goes on in the company. Similarly, the workforce cannot perform all the tasks at once, to avoid any discrepancy and errors in the production process, outsourcing is a useful activity. You can delegate the tasks less known tasks and focus on those in which you and the workforce have expertise.
- Competitive Advantage:Consider a scenario when you have obtained a certain edge over the competitors just because you have launched an extra product in the market which is separate than the standard portfolio.
Cons of Outsourcing:
- Security threat:To whomsoever you outsource your business process there is a security threat entailing this outsourcing. If you choose to outsource financial services, then a lot of confidential and sensitive information is vulnerable to be leaked and if you decide to outsource the human resources related tasks then also the subject company has the information of several employees.
- Inefficient managing:It is not easy to maintain constant communication with the company to whom you have outsourced the work. In this scenario, the existing employees may also develop a lack of interest in the company production.
- Customer disorientation:A manufacturer of toys designing and making models for the kids in the US cannot address the core desires of those kids. They are unable to understand what the kids may or may not like with regards to the toys.