The Pros and Cons of Outsourcing Services

As we head off toward 2017, the future looks bright for companies that have been outsourcing services. Outsourcing is a process that capitalizes on regions that provide a comparative advantage in cost without affecting revenues or productivity. It functions by providing a hedge against uncertainty and turbulent economic periods.

If you have been keeping track of the news, times have never been more uncertain and turbulent. Equities markets worldwide are unstable. Political regimes are collapsing. Threats of war and conflict appear more imminent. Global warming continues to wreak havoc and destruction in different parts of the world.

All of these events have established conditions that lead to an increased demand for outsourcing services.

But is outsourcing the “be-all” cure for what ails your business?

There are pros and cons of outsourcing services that you have to be aware of before you decide on implementing the process:

Pros:

  • Reduces cost of business – The greatest comparative advantage lies with labor. If you hire virtual assistants or outsource work to home based workers, you only pay for the hours they render service. If you outsource work to remote locations such as the Philippines and India, the rate per hour can be 50% lower.
  • Improves productivity – By outsourcing non-core functions, you can focus more on the core functions of your business. You can also re-purpose cost savings to fund revenue-generating projects.
  • Increases quality of work – Not only do you improve your quality of work but even the non-essential tasks are managed properly. You can even outsource technical skills to people who are more qualified than you.
  • Improves business flexibility – Do you want your business to be managed 24/7? Outsource work to talent from the Philippines and India. Time zone differentials make it possible to have your business supervised even after office hours at no extra cost.
  • Reduce the risks of business expansion – If sales volume did not increase enough to warrant additional manpower, simply terminate the outsourcing agreement. There are less legal issues to be concerned about when you outsource services.

Cons:

  • Cultural and Social Nuances – If you are planning to hire virtual assistants from other countries, you will have to deal with cultural and social nuances that may impact on the working relationship.
  • Language Barrier – Another problem when hiring virtual workers or contracting service providers is language. A difference in perspective in combination with social and cultural nuances will lead to miscommunication.
  • Data Security – Whenever you work across the virtual world, you are at risk of transmitting confidential data or giving access to your business network. There have been cases when a breach of information has lead to the downfall of business.

The answer to whether you should be outsourcing services or not comes down to one question: “Are you managing your business from the position of revenue generation or cost savings?”

If you are focused on generating revenue, then you should outsource services. Although outsourcing reduces business costs, it provides you more options to improve revenue. The risks or “Cons” of outsourcing can easily be managed through smart planning and the implementation of adaptable security protocols.

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