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Advantages and Disadvantages of Outsourcing
Hi I am back again …. To give you more information on outsourcing . In my first blog I told you about outsourcing now I will tell you about various advantages & disadvantages of outsourcing…
Ogranizations who want to perform outsourcing must be aware of prons and cons of outsourcing. Most companies are not aware of it but still they jump in this business. Before starting with offshore business lets have a look on the various advantages and disadvantages of outsourcing.
Advantages of Outsourcing
• Outsourcing gives you access to professional and better services.
• Off shoring of non core activities of your company give you time to concentrate on other important things.
• It helps to increase the efficiency of your business.
• It helps you to streamline your business more efficiently.
• It provides more flexibility to your business.
• Outsourcing of non core activities help you to increase productivity of non core processes.
• Profits made due to off shoring can be utilized on latest tools and technologies.
• It helps you to save time, man power and operating cost involved with business.
• It gives competitive edge to the business.
• It can cut operational cost to half.
If you want that outsourcing should help you then concentrate o9n the above mentioned points and it is sure to help you and your business.
Disadvantages of outsourcing
• It is most cost effective way to conduct your business then outsourcing it.
• It can be difficult to manage with offshore provider as compared to0 managing processes at your end.
• Outsourcing provider can come to know your company’s confidential information if you are outsourcing services such as payroll processing services and tax preparation services.
• You can loose control on the outsourced product.
• Outsourcing, though cost-effective, might have hidden costs, such as the legal costs incurred while signing a contract between companies
• The employees in your organization might not like the idea of you outsourcing your processes and they might express lack of interest or lack of quality at work
• By outsourcing, you might forget to cater to the needs of your valuable customers as your focus will be on the business process that is outsourced
These are the various drawbacks of outsourcing you need to be very care ful while outsourcing your business. And should keep above points in your mind.
On my upcoming post I will tell you more about outsourcing and various methods involved in it.
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Thursday, December 10, 2009
Outsourcing and its benefits
Outsourcing is term which is used to describe processes and services of one company being handles by group of individuals of another country. In outsourcing we take help of another company to do our work. This is done so as to get good quality in cheaper price.
Most of the companies outsource their work to such companies where they do not have to give high wages to the workers they prefer such countries and locations where they can get cheap labor.
The main aim of outsourcing is to take one’s company work to other countries and paying them for working for us. The main reason of doing outsourcing is that it saves money, improves quality of work. Data –processing Industry was the first who performed outsourcing . Today the business of outsourcing has became very popular.
There are various types of outsourcing:--
* Information technology outsourcing (ITO)
* Knowledge Process Outsourcing(KPO)
* Software R&D
One can perform Domestic Outsourcing or Overseas Outsourcing
Outsourcing is know as domestic outsourcing when both the companies one which is outsourcing its business(primary) and the other one which is going to perform outsourcing for this company (secondary) are located in the same country. One of the main reasons for doing domestic outsourcing is to reduce cost.
Outsourcing is referred to as Overseas outsourcing when the primary and secondary companies are located in different countries. In this type of outsourcing large as well as small companies employees labor in other countries to increase their profit. mostly highly developed nations outsource their work to the developing countries. This is mostly done because the cost of material, buildings and labor is very high in these countries as compared to the developing countries .So in order to save money they outsource their work.
Outsourcing is becoming popular day by day.There are many reasons for this some of them are:---
* Labor cost is very low
* Workforce power is Increased
* It provides great flexibility
One of the prime reason for outsourcing is to reduce cost. When we outsource work to other countries cost is greatly affected this is because of lower wages and costs associated with managing these outsourced resources.
Outsourcing helps to increase your workforce because of networking with people help to increase more growth opportunities because we relay on them for our work.
Outsourcing can help your organization gain a competitive edge in the market .Another benefit of outsourcing is increased efficiency.
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