If you are a business owner or manager, you are potentially considering the option of outsourcing some of your projects. Outsourcing provides your business with many potential advantages and opportunities. However, it does present many possible problems as well.
The Good News
Outsourcing projects is a great way to prevent your company from falling behind. If you are experiencing a sudden surge in business, outsourcing is a great way of keeping up with demand and meeting deadlines without overwhelming your employees. Outsourcing projects which exceed the current production capabilities of your business is especially useful if you only need extra labor temporarily.
If you have a project on your hands which your company is not equipped to handle, outsourcing can be the solution to your problem. Outsourcing gives you access to workers who have a much more diverse array of skills than is present within your company. If aspects of a business project require special skills which are unavailable at your company, you can outsource the project, or portions of it, and have someone with the required skills complete it.
One of the more popular reasons why businesses turn to outsourcing is because it allows for lower labor costs. Many areas have lower costs of living, so the salary requirements among workers are considerably lower than those in your area. This often results in decreased overhead and a higher profit margin.
The Bad News
Employee job loss is one of the biggest problems associated with outsourcing. Many companies who choose to outsource business projects overseas to take advantage of less costly labor tend to downsize their more expensive local labor force. If you choose to do this with your own company, know that this can lead to negative effects ranging from bad publicity to a boycott of your company. The reason for this is that downsizing in favor of outsourcing is a business tactic which is very unpopular with the public, since it contributes to unemployment and other problems.
Distance is the source of many problems related to outsourcing. Outsourcing to different regions or countries brings many factors into your business such as time zone differences, language barriers, and cultural differences, all of which have the potential to yield miscommunications or misunderstandings regarding your expectations. Quality control is known to also suffer as a result of distance. If you outsource your business projects to a distant location, it is unlikely that you will be able to oversee production on a regular basis, which sometimes leads to inferior results.
Financial risk is one of the biggest drawbacks to outsourcing. Unexpected costs are a frequent problem. Depending on the nature of your business, it is possible to encounter an increase in shipping costs, misunderstood production requirements or other added production costs and import taxes. Other factors often cause project costs to exceed the budget for the project.
Outsourcing various projects related to your business is a business tactic which is sometimes very useful. Unfortunately, it also introduces many risks which lead to problems for your business. Researching the pros and cons of outsourcing is the best way to determine whether or not it is the best option for your business.