Outsourcing Pros and Cons
Businesses in both the private and public sectors are struggling with unprecedented challenges: increasing economic uncertainty, finite resources, limited budget, market complexity, tough competition, and changing consumer expectations. Striving for a competitive advantage and market leadership, all progressive companies are looking for a sustainable business strategy to overcome these obstacles and reach business goals.
Year after year, outsourcing is proved to be an efficient strategy to address such business challenges through contracting out in-house processes to third-party outsourcing service providers, nearshore, offshore or inshore. Delegating routine back-office tasks, entrepreneurs receive more time to concentrate on their core goal, stakeholder value maximization. Moreover, business owners choose outsourcing services as a powerful tool for businesses’ growth, productivity and cost reduction.
However, any strategy has pros and cons. And it is critically important to understand them if you want to take the best advantage of an outsourcing strategy. So, let’s take a close look at outsourcing pros and cons.
Pros of Outsourcing
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- Fast Delivery of High Quality. Trusted outsourcing providers bring to customers deep industry and functional experience, with supporting infrastructure and approaches, enabling faster speed and higher quality of product/service delivery.
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- Team Scalability. Variety of outsourcing engagement models empowers customers with exceptional flexibility, supporting their requirements to scale the team up or down according to ever-changing staffing demands.
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- Access to Global Skills. Tapping into a global talent pool ensures a flow of fresh innovative ideas and insights for business.
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- Cost Savings. Lower-cost geographies driven by highly skilled employees are a good choice for reducing operating expenses. Any business can benefit from global services today.
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- Time Efficiency. Internal staff can focus on the other mission-critical business needs while not being concerned about routine tasks.
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- Increased Revenue. All in all, outsourcing helps companies worldwide to increase revenue and gain the competitive advantage of the above-mentioned Fast Delivery of High Quality, Team Scalability, Access to Global Skills, Cost Savings, and Time Efficiency.
Cons of Outsourcing and Solutions
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- Sensitive Data Exposure. To mitigate the risks of accidental or intended data exposure, companies sign a Non-Disclosure Agreement (NDA) through which the parties agree not to reveal confidential information predefined in the document.
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- Hidden Costs. The threat of hidden costs can be easily prevented by a clear and transparent outsourcing contract. Both parties should thoroughly cross-check the document since it is a prerequisite for successful cooperation.
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- Management Control Loss. While selecting an outsourcing engagement model, companies decide whether to leave management control of outsourced processes in-house or pass it to the vendor.
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- Language and Time Zone Difference. Supplier selection criteria should include a time zone and language skills since they significantly contribute to productivity and communication.
- Language and Time Zone Difference. Supplier selection criteria should include a time zone and language skills since they significantly contribute to productivity and communication.
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The right outsourcing provider can introduce successful products/services, differentiated approaches, higher revenues, unparalleled experience and streamlined operations. However, identifying such provider is not an easy task. It requires a comprehensive and objective assessment of the provider’s outsourcing potential.
To sum up, any strategy has pros and cons. But at pwrteams, we do know how to manage all of them. We believe that effective management is important for your high performance. But real collaboration goes deeper. It is about responsibility and commitment. We understand our customers’ strategic goals and how we can contribute to these goals. Through long-lasting relationships we enhance our contribution; adapting outsourcing service delivery based on rapidly changing market and business conditions.
