Disadvantages of Outsourcing

Advantages of Outsourcing

The benefits of outsourcing are:

Less capital expenditure - For example, by outsourcing information technology requirements, a company does not have to buy expensive hardware and software.

Less management headache - For example, by outsourcing business process such as accounting, a company no longer has to hire and manage accounting personnel.

Focus on core competencies - Outsourcing non-core related processes will allow a business to focus more on it's core competencies and strengths, giving it a competitive advantage.

Disadvantages of Outsourcing

Before deciding on outsourcing your company's business process, keep in mind the disadvantages of outsourcing:

Less managerial control - It may be harder to manage the outsourcing service provider as compared to managing your own employees.

Outsourcing company goes out of business - If your outsourcing service provide goes bankrupt or out of business, your company will have to quickly transition to a new service provider or take the process back in-house.

May be more expensive - Sometimes it is cheaper to keep a process in-house as compared to outsourcing.

Security and confidentiality issues - If your company is outsourcing business processes such as payroll, confidential information such as salary will be known to the outsourcing service provider.

A precise definition of outsourcing has yet to be agreed upon. The term is used inconsistently. However, outsourcing is often viewed as involving the contracting out of a business function - commonly one previously performed in-house - to an external provider.^[2] In this sense, two organizations may enter into a contractual agreement involving an exchange of services and payments. Of recent concern is the ability of businesses to outsource to suppliers outside the nation, sometimes referred to as offshoring or offshore outsourcing (which are odd terms because doing business with another country does not mean you have to go offshore.^{[3][4][5][6][7]}) In addition, several related terms have emerged to grasp various aspects of the complex relationship between economic organizations or networks, such as nearshoring,multisourcing^[8][9] and strategic outsourcing.^[10] One of the biggest changes of recent years has come from the growth of individuals using online technologies to use outsourcing as a way to build a viable service delivery business that can be run from virtually anywhere in the world. The preferential contract rates that can be obtained by temporarily employing experts in specific areas to deliver elements of a project purely online means that there is a growing number of small businesses that operate entirely online using offshore outsourced contractors to deliver the work before repackaging it to deliver to the client. One common area where this business model thrives is in provided website creating, analysis and marketing services. All elements can be done remotely and delivered digitally and service providers can leverage the scale and economy of outsourcing to deliver high value services at vastly reduced end customer prices.

Leasing (Outstaffing, Outsourcing, Temporary staffing, Staff leasing) of personnel

Many Companies in their activities faced the situations when the stuff is overloaded, and to hire a new employee is unprofitable, and the work should be made professionally and in time. In this case the personnel lease could help. The lease personnel concept becomes an integral part of the lexicon of the top management of the domestic Companies. Though its practical use in Ukraine is quite seldom, at the same time the USA and the Eastern Europe has already developed this tendency, which brings about $60 billion income per year. So, what is this and what advantages it may give to the domestic Companies?

Дата добавления: 2015-10-24