Posted by Gayle Bryant on 25 September 2013
Has your organisation reached the point where it is considering outsourcing some of its workforce? This can occur for a number of reasons, but the main one tends to be to reduce costs.
However, there are pros and cons of going down this path and each needs to be weighed up carefully before you decide whether this strategy is the best one for you.
Arguments for outsourcing
This is the main argument for outsourcing. The general perception is that by using contractors you can save on operational or recruitment costs. It’s also a flexible option as you can take on more staff or reduce the number whenever you need to. Many information technology and financial organisations have reaped the cost benefits of outsourcing business processes to lower-paid foreign labour.
Access to skilled services
Rather than try to be all things to all people, outsourcing particular sections of your business means you have access to staff who specialise in that area. As they are specialists, they are also likely to meet milestones far quicker. It also means your in-house staff can focus on the organisation’s core strengths.
It takes the emotion out of hiring and firing
Working with an outsourced workforce makes it easier to replace staff if a relationship isn’t working without any of the usual associated human resources issues.
Reduction in risk
An outsourced company usually takes on the risk of any projects they are involved in with you. This reduction in risk alleviates stress in your own employees, making them more productive.
Benefit of different time zones
If your outsourced workforce is in a different time zone, they can be working on projects at times when your in-house employees have gone home for the night. The best part is you’ll have the results waiting for you the following morning.
Disadvantages of outsourcing
Loss of control
Once you outsource any business process you will to some extent lose control over them. Any changes that need to be made are likely to take longer as you’re working from different sites and communication issues may occur over project specifications.
Security may also become an issue as once any information goes off-site there is a threat to any sensitive or confidential data being misused. Protecting your intellectual property is not always easy and taking legal action if it is violated is an expensive and not always effective solution.
Different professional standards
An outsourced workforce is likely to have different professional standards and levels of loyalty. This may be because they have a number of different customers and need to prioritise tasks. You may find that projects you outsource take much longer than they would in-house because of this.
Potential conflicts of interest
The outsourced workforce you are using may be providing similar services to your competitors, so there is always the potential for a conflict of interest.
Generally the advantages of outsourcing your workforce – a reduction in costs and a streamlining of business processes – outweigh the disadvantages. However, before you take any drastic action, be sure to understand what outsourcing involves to guarantee it is the best course of action for your business.