Outsourcing: Is It Ruining Your Business?

Outsourcing: Is It Ruining Your Business?

42% in North America; 35% in Europe and Africa; and 23% in Asia. These are the rates at which companies outsource in their respective regions.

Considering 79% of firms are happy with their decision, outsourcing is having a positive impact on the industry. In the past decade, businesses around the world have taken advantage of outsourcing to great effect.

Is the process of negotiating third party contracts all positive, though?

The impact of outsourcing is undoubted, yet it isn’t infallible. Although it has its supporters, it has hurt global economies thanks to its low pay rates.

To fully understand the issue, take a look at why it may harm your success.

Loss of Control

As a client, you have the leverage to influence decisions. However, you aren’t in charge like you would be if the jobs were in-house. Someone else, another boss, has that privilege and this is an uncomfortable thought.

What if they are incompetent? What if they don’t have the same work ethic? What if the decision blows up in your face?

The inability to monitor progress and check up on targets is why outsourcing may not be helpful. There are ways around this, of course, yet the loss of power is inevitable.

Data Breach

Businesses have sensitive information which is the key to their success. Your firm is no different in this sense, but where companies that outsource differ is that they have to share data.

Otherwise, there is no way the outsourcing firm can cut costs, save time and increase standards. This is a catch-22 situation as no organisation wants to put their data in the hands of a stranger.

Remember that breaches are the modern day equivalent of a PR nightmare. Sadly, there is no way to ensure that the info remains private because their security may be slack. Again, you’re not in control.

A Money-Maker?

One of the major pros attributed to outsourcing is the ability to cut costs. If there is one reason to jump on the bandwagon, it’s this one, one-hundred percent.

There’s no doubt there is truth to this theory, but it isn’t foolproof. In fact, there are times when outsourcing is more expensive.

Consider bookkeeping. Businesses hire accountants to fill in gaps in their knowledge and save money. With the help of an online course, accountant qualifications are quite simple to attain. And, they don’t cost as much as outsourcing. This is one example yet there are plenty more to add to the list.

Job Losses

In many respects, jobs will get a boost from your decision to outsource. Places such as India, Bangladesh, and China are hubs for subcontractors and they will benefit.

And, the firm will be fine too because it gets to cut labour without lowering quality. The output should stay the same, also.

Although it isn’t business-related, it can be hard to accept that as many as four people need to be laid off work. Plus, there is the worker’s rights issues in Asia, something to which you are directly contributing.

Can you handle the thought of being culpable? Can the company deal with the bad PR?

About author

Poppy loves personal finance almost as much as she loves her two cats, Tif and Taz.
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