The Strengths of Outsourcing (With Important Caveats)

Outsourcing is one of those components that everybody considers, but as businesses start to become more self-sufficient, they may view outsourcing as a negative factor. Outsourcing can be an invaluable asset to your business but it’s important to consider outsourcing “in the round.” There are certainly positives to outsourcing, but there can be a lot of negatives. Here are some pros (with a series of caveats).

 

It Can Strengthen the Business (but it Could Lose Its Identity)

When we start to outsource components, or we ask for help from external sources, it is a cheap and effective way to bring our problems to the forefront and to solve them with efficiency. This is evident in the number of companies that specialise in IT contracting in the big wide market. But when we are outsourcing, it’s is is something that can run the risk of cutting the nose off of the business to spite its face. When we are outsourcing, we are, in effect, taking a part of our business and cutting the edges off. So it’s almost a little bit like we are selling off our business piece by piece. This can throw up a whole heap are problems relating to transparency. The customers may want to know if we are being ethical, or if we do everything under one roof, but if we start to siphon off parts of the business, our employees may feel the ground moving beneath their feet. And by the law of chaos theory, the worst-case scenario could be that the business loses its identity. However you can keep this together by ensuring your business has a strong cultural framework, and you prioritise transparency above all else. 

 

It Can Increase Your Profits (but it Could Result in Job Losses) 

When you start to outsource, especially to offshore companies, you can see your profits start to soar. This is predominantly due to reduced labour costs. For example, outsourcing your contact centres to a company 1,000 miles away will be cheaper for you, and you will be able to get through more customer calls so more customer problems are solved, which improves the bottom line. But this means you may be losing a lot of people on your side. Outsourcing always saves you money, and therefore, increases your company profits. When we outsource to a country with lower labour costs, we have to remember the negative effects of outsourcing, such as losing local talent. This is always our cross to bear. You may find it’s more important to nurture local talent and build your business up organically. This means having everybody under one roof. But then when you find the business demands more hands on deck to deal with incoming calls and complaints, it’s cheaper to have your business propped up by another outsourced company. And while you may find that there’s less opportunity for local workers, ultimately, it depends on the industry in which you operate. In the US, manufacturing communities are always hit hard by factory closures. However, in the digital landscape, the right talent can be located anywhere. It’s about getting the balance right, making sure that you’re not shooting yourself in the foot in this regard. This is why it’s important to look at the bigger picture and to ensure your 5-year plan is thoroughly worked out. 

 

Outsourcing Can Strengthen Ties With Other Countries (but it May Result in Lower Standards) 

Working with another country is a great way to strengthen trade. When you are outsourcing to another country, it can be a way to strengthen any relationship. It is a constant issue with regards to strengthening any working relationship, especially if there are countries with questionable resources or affiliations. When you use outsourcing to strengthen international ties, it can prove beneficial in one respect due to the olive branch being offered. However, on the other hand, when you start to outsource to a country with different rules and regulations, this could be opening a can of worms. If you are a company that outsources to a country with more relaxed labour laws, lower environmental standards, and lower wages, this can reflect poorly on your business in many ways. So if you are looking to improve your brand by outsourcing certain components, it may mean the customer may not have as much faith in your brand as they did before.

Is outsourcing worth it? There are so many different things to ask. Outsourcing is, on the surface, a wonderful way to save money. But there can be a whole heap of ethical, moral, and structural dilemmas to deal with.

 

 

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