Skip to main content

Outsourcing in Business; It’s Advantages and Disadvantages.

Benazir Marjan intends to use her business knowledge in the practical field through this article.

outsourcing-in-business-advantages-and-disadvantages
outsourcing-in-business-advantages-and-disadvantages

Outsourcing in Business; It’s Advantages and Disadvantages.

When a company hires a third party to perform tasks, handle operations, or provide service for the company, that is called outsourcing in a business. Advertising, office and warehouse cleaning, website development are the best example of outsourcing. Majority of business owners delegate authority to outsourced specialists when it comes to bookkeeping, maintenance and recruitment. Basically, outsourcing helps business and enterprises to focus most of their resources on the main activities.

Usually, companies hire outside parties to perform specific tasks as a way to reduce operating costs such as salaries, overhead, equipment and technology. Ther are both benefits and drawbacks of outsourcing. The explanations are given bellow from both aspects.
The Advantages of Outsourcing:

1. Outsourcing ensures to get more experts in related field. Nobody is perfect at everything. Thus, by outsourcing particular tasks, companies are often able to substantially improve performance by drawing on the niche skills of experts in certain fields.

2. Outsourcing your business would free your energies and enable you to focus on building your brand, invest in research and development and move on to providing higher value added services.
3. It eliminates the need for investment in infrastructure as the outsourcing partners takes the responsibility of the business processes and develops infrastructure for the same.
4. Usually, small businesses tend to outsource work is because it will get done quicker. If you are working with a limited number of staff members, you can get things done faster by passing time consuming tasks on to freelancers or external agencies.
5. Outsourcing helps in cost reduction. Outsourcing work is almost always going to be cheaper than hiring full time permanent employees. Your profits are about to extend to shorter overheads.
6. You can simplify project management through outsourcing. If you choose to outsource work via wide range of specialist freelance websites and online services, you are often provided dynamic and intuitive platforms that will help you to effectively manage what’s being done, when it’s due for submission, and how it will be paid. Most of this can be automated, freeing up your time for more important work.
7. Companies can make their work done even from out of the country’s border. By using the technology they can hire part time workers for their company those who can work remotely. This way, it helps to save time. In some cases, this way a company reduces its cost too.

8. Outsourcing ensures a faster and better service. If your service offerings are better with high quality deliverables and decrease the lead time it takes for your product to reach the market place. Thus, you would be faster in getting your ideas converted into products and better at delivering the value-added propositions.
9. It enhances to share the risk of any project. One of the most important factors in any project is risk assessment and analysis. Through outsourcing you will be able to benefit from their expert ability to plan and mitigate potential risks.
10. Outsourcing can ensure the peace of mind. At the end of the day, choosing to outsource with a reliable and individual or agency should give you peace of mind that tasks are being handled expertly and efficiently without having much worries regarding related issues. It’s it offer you a better state of mind in your work life?

Scroll to Continue

Disadvantages of Outsourcing:

1. Sometimes outsourcing can create lack of control. Whenever you are hiring a contractor instead of an employee and since the person is not working on-site, it can be difficult to maintain the level of control you really desire.
2. Communication is just essential to be successful in business world. In case of outsourcing, when employees are out of country, where they works remotely. It may create lack of instant communication and due to this sometimes works may get delay in accomplishing within target time. It hampers the company’s overall production and linger in reaching to desired output level.

3. When the work is assigned to a third party to get done, there arises a risk about the quality of the task. Thus the company needs to state the quality standards in a very upfront way to minimize the risk of producing less quality works.
4. In some cases, outsourcing could be a threat to the company culture. As employees get hired only for a certain purpose, they may not able to understand company’s traditions and overall values. This is a challenge faced by outsourcing in business.
5. Sometimes, outsourcing can be more costly. In some cases, companies need to pay more salary to cataract employees than permanent ones which compel to increase the budget.
6. Again, due to outsourcing, sometimes internal talents get deprived in their self-development and promotion. They don’t get the chance to show their potential as companies tend to hire part time or contract employees from outside.
7. Sometimes third party can refuse to supply without prior notice. This can create a disaster for the company in upcoming consequences.
8. Anytime you involve someone new in your business, whether that could be a new employee, a new business partner, or a new supplier, you can increase your confidentiality risk. This is same for outsourcing. As with any business interaction you need to handle very smartly, to mitigate the risk as much as possible if you decide to outsource.
9. Outsourcing can come up with less flexibility. You may not get your employees just when you need them badly due to timing difference or long distance.

10. Outsourcing can create in-stable situation in a company. Thus, as a consequence, the company may go out of business which is a big threat for the company.
Twenty first century offers us with thousand types of opportunities to earn money and move on. If anybody can over come the drawbacks of Outsourcing, for sure, he will be able to benefit himself from it through business. This is a dynamic business world, where challenges are everywhere. Nobody can gain anything without taking risks. Thus companies can try with its’ best effort to minimize the risks associated with outsourcing and take the best benefits from it.


This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2022 Benazir Marjan

Related Articles