Benefits And Disadvantages of Outsourcing

by The Editorial Team on December 30, 2020

Outsourcing has been around for over thirty years but there are some companies and people who are not exactly sure what outsourcing means.

When a company decides to outsource this means that they let another company or freelancer do a job that is usually done by employees of the company that is outsourcing the work.

Basically, it means that the company delegates some aspect of their company to an individual or external firm who are not related on a permanent basis with the company that is providing the work.

Some of these outsourced jobs can include article and report writing, graphic design, email services, payroll, call center services, and many more. Many times the companies that do the outsourced work are located overseas.

Benefits of Outsourcing:

1. Cost Saving

One of the main reasons that a company might outsource work to a freelancer or another company is that it often saves the company money. This is the number one benefit.

The reason that it is usually cheaper is that the company that is outsourcing the work does not have to pay for any benefits for the freelancer or company that is doing the job.

The cost of overhead is usually reduced.

Reducing labor costs is one of the many reasons a company will outsource, especially if they are outsourcing overseas because the wages are lower.

Many businesses in America and Europe will outsource their work to Asian countries because the work is done at a lesser cost although the employees there are highly qualified to do the job. The reason that they will work for less is that the living expenses are cheaper.

2. Offload Smaller Tasks

Doing this will allow the business to be able to concentrate more on primary tasks such as promoting, producing, and distributing the product the company makes. Outsourcing basically will help to reduce the workload of a company.

Not all businesses or companies that use outsourcing are huge conglomerates. Some are home businesses that use outsourcing which could include having someone with the expertise to design their business website if they do not know how to do this task.

3. Finding an Expert

Another advantage of outsourcing is that it will let the company find the best expert for specialized work. If this is going to be a “one-time thing” then it would be cost-efficient to let a specialized freelancer do the work instead of training an in-house employee to do this one time project.

Imagine having a large pool of experts without having to hire employees either full or part-time and giving them benefits.

4. Risk Management

When a company or business is outsourcing there is usually a contract signed between both parties which means that the person who is accepting the outsourced work is the one who is responsible for that part of the business.

This type of benefit is referred to as “risk management.”

If a job that was outsourced did not get finished in the stated timetable it would be the company that was doing the work who would get in trouble, not the business itself.

Disadvantages of Outsourcing:

1. No Direct Communication

A main disadvantage of outsourcing to another company or a freelancer is that direct communication between the one doing the outsourcing and the one that is actually doing the job.

By eliminating direct communication it does not allow a company from building a solid relationship between the business and the freelancer or company who is doing the work. This can lead to dissatisfaction with both parties involved.

Even with communication it can be delayed thus possibly resulting in delayed project implementation.

2. Language Barrier

If the outsourcing is to another company or freelancer in another country there could also be a language barrier. No matter how skilled the Freelancer is but a communication barrier is an issue, completing the tasks correctly and on time can become complicated.

A couple of solutions can be applied here, one is to find an interpreter or translator that will explain the job to the Freelancer in his native language or look for someone who both can understand and speak the English language well enough to understand the project thoroughly.

3. Security Issues

In outsourcing, the potential security risk is always a concern especially in regards to keeping the information private and secure. Most specifically a problem with software development, when entrusting the product development to total strangers who are based in other countries.

We’re talking about copyrights, trade secrets, patents, intellectual properties, and other sensitive information.

Conclusion

With so many companies becoming larger and going global it only makes sense to outsource some of the work of the company.

Before a company considers outsourcing any work to another company or freelancer they should sit down and weigh out the advantages and disadvantages so they make the best decision for their company.