Outsourcing

In the following few posts, we want to address the outsourcing issue. The term outsourcing means obtaining (goods or a service) from an outside or foreign supplier, especially in place of an internal source. Is this a good thing? Or better, will outsourcing give my business the cutting edge?

One way of explaining or justifying outsourcing is that you should do what you do well and let another do everything else. In other words, you should rather focus on your company and growing your client base/products, and let someone else take care of the rest. This may sound as the ideal solution, but you need to take the pros as well as the cons into considerations. The fundamental key is to know your business and your goals. Then you can decide how outsourcing might help you achieve them.

The main advantages are:

Cost saving: The costs of an in-house employee is almost always higher than that of a service provider or freelancer, especially in terms of hours billed, leave, office space and equipment.

Quality and specialized skills: A service provider or contractor has the expertise and required experience, which means you are guaranteed of a job well done and access to special skills. They want a good rapport to ensure a successful relationship and more business.

Contractual responsibility and staffing: The accountability of a service provider is greater than that of an employee. When outsourcing a non-core role, one sidesteps training current staff as well as recruiting suitable staff.

Workforce flexibility: A previously non-core function may become more significant and require skills the business may lack. In such a situation, outsourcing is an excellent work around. A service provider often has a talent pool that is accessible to their clients.

Capacity: Sometimes additional staff is required to meet a certain deadline. Instead of employing people who would not really be required afterwards, freelancers or contractors can lend a hand as and when their help is necessary.

The main disadvantages are:

Protection of assets: Who is the owner of the data and database? What if the service provider steals your idea? Service providers and freelancers most often work remotely. The data and databases are then located at their premises, which could result in some loss of control. Well-structured contracts may circumvent difficulties here.

Company knowledge: An employee may have a better understanding of your business, especially if he/she has been working for you for a while. Detailed handovers can ensure that concerns and objectives are taken into account.

Service provider staff: Even though the service provider offers skilled staff with the necessary know-how, staff turnover and sudden demand for skills may leave you in the dark. Skilled staff is extremely sought-after, which brings about a high staff turnover.