There are certain positives and negatives both attached to a certain aspect or a business dimension or a business preposition. Similarly, it holds as a vital fact for outsourcing & movement of business operations to another company or place. Outsourcing is commonly in the business world known as a common practice of contracting out business functions. On top of this the business processes to third-party providers. In most of the cases it holds many advantages. However, in some cases it has some disadvantages as well. As a matter of fact the benefits of outsourcing can be substantial in many ways. These includes from cost savings and efficiency gains to gain a far higher competitive advantage. Most of the time it is an act conducted for the sake of gaining greater competitive advantage. Hence, for sake of much higher gains.
A common practice that is used very often in the call centre industry. Especially, in the Western countries that includes United States, United Kingdom and Canada. A common practice in call centre, moving them from USA to India & China, has been a common practice since 2007-08. Largely, due to the huge cost saving aspects associated with such a business activity. It not only saves massive budget & training costs. As well as many other costs including machinery and human resource. At the same time it is a massive cause of increased business functions. Mainly, due to the huge amount of concentration of call centre industry towards South-Asia. However, having said that, one should consider carefully the pros and cons of transfer of business activities & operations. Ironically, before planning or deciding to contract out any kind of activities or business operations.
THE ADVANTAGES OF OUTSOURCING TO COMPANIES:
There are many reasons why it holds many key advantages to companies in the world of business and finance.
Outsourcing is a massive cause of increased efficiency in business operations. The main reason for this is specialised services that are being outsourced. Hence, just for the specific reason of managing the services in terms of efficiency measures. This also includes specialised operations and use of manpower. Especially, for highly professional outsourced business operations. Examples includes; transfer of payroll services for the sake of increased efficiency to specialised payroll services companies.
Controlling Extra Costs:- Advertisement -
The main reason why outsourcing takes place as a common business activity or procedure is for the sake of controlled costs. Most businesses take this option of transfer of business activities for the sake of controlling the costs of paying for the whole department. These costs includes salaries, training costs & training material provided. Furthermore, machinery used, and other assets that includes electronic equipment. An example is outsourcing of call centre activities to other country or a different location that can be abroad in most circumstances. The costs savings can only happen if the business owner knows well how to utilise their resources. Especially, in countries where manpower is far cheaper, for example China.
Gaining A Greater Competitive Advantage:
Outsourcing for the sake of gaining competitive advantage is one of the most common reasons why businesses prefer outsourcing. It really helps you leverage knowledge and skills. Hence, along with your complete supply chain. An example includes outsourcing in the supply chain industry.
THE DISADVANTAGES OF OUTSOURCING:
There are some disadvantages associated with outsourcing that makes people to consider time & again before opting for outsourcing options. As it involves handling over direct control over a business function or a process to a third party. This aspect as such comes with certain risks. These risks involve leakage of some vital information. Obviously, that can prove to be costly if the information is misused. Other problems or disadvantages includes problems that relates to people taking ideas of services and functions. As well as rolling the ideas forward.
These disadvantages includes;
Confidentiality & Security:
Confidentiality & business security issues are some of the most common disadvantages that are associated with outsourcing. There is a huge capacity in outsourcing of information being leaked. In addition to this, the tendency of critical information being misused.
Service Delivery:- Advertisement -
Another major disadvantage that can give a bad name to the business. Service delivery and quality assurance issues can cause failure to comply with timeliness. Alternatively, fall below the expectations.
Outsourcing can even cause difficulties in management due to lack of communication. The changes at the outsourcing company could lead to friction.
Offshore outsourcing causes disadvantages due to challenges due to time zones. Other challenges also includes due to differences in language. Finally, as well as due to cultural preferences.