Advantages and Disadvantages of Outsourcing for Your Business
Updated: May 14
In the last three decades, the outsourcing industry has been growing at a rapid rate. More and more businesses are outsourcing some parts of their business process. According to a recent survey, 33% of small businesses outsource some part of their operation, and about 52% of businesses plan to do it in the future.
If you are planning to introduce outsourcing to your business, you should first get sufficient insight into the advantages and disadvantages of outsourcing. This article aims to assist you in moving forward to make worthwhile decisions.
Advantages of Outsourcing
Hire Experts for The Operational Processes
Outsourcing Providers tend to have a larger talent pool. They can provide the exact expertise with the proven track record of success that your business needs. There will be no geological bindings for the employees as they can work from where they are.
Outsourcing introduces a diversity of expertise from different races, countries, and specializations. With the proper set of skills, you can improve performance to the maximum rate of profitability.
Improved KPI and Performance Matrices
Having experienced people assigned to your tasks means they will ensure that your tasks are delivered on time without delay. Outsourcing streamlines business operations by allocating the right people to the right task.
The streamlined business process ensures all tasks are performed without any major errors. Overall, you will notice a significant improvement in KPIs and other performance metrics.
Reduced Operational, Overhead, and Recruitment Costs
Because you are delegating part of your operational process to an outside entity, you do not need to invest in infrastructure for that process. Besides, you can also save the cost of hiring an in-house employee.
Companies often allocate a large portion of their budget to training employees. When you outsource your employees, you do not have to spend a penny training them. Thus, outsourcing can reduce operational, overhead, and recruitment costs.
Re-focus on Core Business Processes
As a business owner, your core focus should be building profit-making strategies. Allowing an outsourcing provider company to monitor operational tasks will allow you to focus on the core business activities.
For example, let’s say you have an e-commerce business. Your priority should be reaching vendors and ensuring the utmost sales from your website. However, there are other tasks like customer support, social media management, engaging customer queries, product entry, website management, etc.
When you outsource employees for the overhead activities, you can allocate your time to focusing on your priority tasks.
Risk Sharing with The Outsourcing Partner
Since it is the outsourcing company's responsibility to ensure the delivery of results, you are shifting some of the risks and responsibilities of your business to the outsourcing company. Since they are experts, they will be able to mitigate the risks associated with their given tasks in a better way.
Disadvantages of Outsourcing
Possible Loss of Control
Delegating tasks to an outsourcing company may result in having less control over these departments. The quality of the tasks delivered will also be a matter of question if you do not work with a reputed outsourcing provider. You will also be unable to respond quickly if an error occurs.
Confidentiality and Risks of Exposure
Certain administrative activities are very confidential, such as information relating to insurance claims, medical records, accounting, etc. There is a risk of data exposure if no tight security protocol is maintained by the outsourcing firm. Make sure you sign a protective clause with the outsourcing provider to avoid such risks.
Even though you sign a contract before hiring an outsourcing provider, they often charge additional amounts for any service outside of the contract. Such additional costs can be a burden for the company.
Communication is the key to success for every business. The majority of outsourced employees work from home or under the supervision of outsourcing providers. Some communication issues might occur when you outsource employees.
Lack of Personalized Focus
Some substandard outsourcing vendors cannot provide complete focus on your tasks while providing services to multiple clients.
Are You Still Planning to Outsource?
As you can see, outsourcing has both advantages and disadvantages. However, different companies are affected by different factors. You can take full advantage of outsourcing by hiring a reputed provider who will ensure benefits and maximum efficiency for your company. Contact ASL BPO to get a free quote.
Zayed Ahmed is the Founder and CEO of ASL BPO and the Co-Chairman of the Global Market Development Subcommittee of the Bangladesh Association of Contact Center and Outsourcing (BACCO). He has been proudly involved with the outsourcing industry in Bangladesh since 2009.
His prioritization of values and visionary perspective has earned him opportunities to assist hundreds of campaigns around the world. He aims to span the BPO industry of Bangladesh globally with top-notch business support solutions.