What are the advantages and disadvantages of outsourcing?
When outsourcing done for the right reasons, it will actually help your company grow and save money. Here are the top advantages of outsourcing:
• allows you to get the services of higher quality and/or cheaper;
• improves the innovative opportunities of the company due to the interaction and partnership with world-class supplies, who have a great intellectual potential and rich innovative experience;
• provides greater flexibility in the event of a sudden change in market conditions or consumer preferences: it is easier and cheaper to find new suppliers with the necessary capabilities and resources than to rebuild the internal activities of the company, eliminating one of power and resources and creating new ones;
• accelerates the acquisition of resources and skills;
• allows the company to focus on its core business. If your company will have only one disadvantage, it can break the strongest business plan. Here are the top disadvantages of outsourcing:
• loss of managerial control: whether you sign a contract to have another company perform the function of an entire department or single task, you are turning the management and control of that function over to another company. True, you will have a contract, but the managerial control will belong to another company;
• threat to security and confidentiality;
• quality problems: the outsourcing company will be motivated by profit. Since the contract will fix the price, the only way for them to increase profit will be to decrease expenses. As long as they meet the conditions of the contract, you will pay. In addition, you will lose the ability to rapidly respond to changes in the business environment. The contract will be very specific and you will pay extra for changes;
• tied to the financial well-being of another company: since you will be turning over part of the operations of your business to another company, you will now be tied to the financial well-being of that company. It wouldn’t be
• allows you to get the services of higher quality and/or cheaper;
• improves the innovative opportunities of the company due to the interaction and partnership with world-class supplies, who have a great intellectual potential and rich innovative experience;
• provides greater flexibility in the event of a sudden change in market conditions or consumer preferences: it is easier and cheaper to find new suppliers with the necessary capabilities and resources than to rebuild the internal activities of the company, eliminating one of power and resources and creating new ones;
• accelerates the acquisition of resources and skills;
• allows the company to focus on its core business. If your company will have only one disadvantage, it can break the strongest business plan. Here are the top disadvantages of outsourcing:
• loss of managerial control: whether you sign a contract to have another company perform the function of an entire department or single task, you are turning the management and control of that function over to another company. True, you will have a contract, but the managerial control will belong to another company;
• threat to security and confidentiality;
• quality problems: the outsourcing company will be motivated by profit. Since the contract will fix the price, the only way for them to increase profit will be to decrease expenses. As long as they meet the conditions of the contract, you will pay. In addition, you will lose the ability to rapidly respond to changes in the business environment. The contract will be very specific and you will pay extra for changes;
• tied to the financial well-being of another company: since you will be turning over part of the operations of your business to another company, you will now be tied to the financial well-being of that company. It wouldn’t be