Outsourcing is the process of assigning a company's business processes to an external agency in lieu of enhancing service quality, driving innovation or deriving benefits of lower labor costs. When outsourced to organizations located in other countries or to foreign subsidiaries, Outsourcing often takes the form of offshoring, also known as offshore outsourcing.
The effects of outsourcing are subjective to the industry and the purpose for which the same was undertaken. However across industries outsourcing is primarily undertaken to enable companies to generate better revenue recognition and to provide them an added competitive differentiator. While done with the best of intentions, outsourcing has a telling effect on quality of products and services delivered as a consequence of this, either enhancing or lowering quality.
While there could either be an increase or decrease in the turnaround time while outsourcing, it could also result in improved or decried customer service. Outsourcing, primarily undertaken to provide companies the competitive edge, can also result in easier management and better productivity based on how effectively the process in managed.
Outsourcing is often undertaken to provide enterprises a competitive advantage by delegating business process to external agencies and realizing the benefits of low labor, better quality and improved innovation. While this provides a good picture of the fair side of the coin, most managers however need to grope with the possible shortcoming of the process and the corresponding impact on the company's core processes. To best analyze the opportunities presented it is essential to reflect upon the advantages vis-à-vis the disadvantages of outsourcing.
The pros of outsourcing often positively reflected by enterprises across industries include -
Often weighed with the advantages before any decision on outsourcing is undertaken, the following represents some of the possible disadvantages often dwelled upon -
Some key benefits that arise from outsourcing.
Despite overwhelming advantages, outsourcing does have a few disadvantages too.
Must-read articles for anyone learning about or interested in outsourcing.