At times, a business is so hectic that some areas of a company’s production process do not get the attention it needs. This is where outsourcing comes in handy. Outsourcing is essentially a service a company can use in order to allocate certain functions of the company to an external provider that specializes in those functions. Lots of different types of companies use outsourcing, such as legal groups, recruiters, manufacturers, as well as tech and IT support. However, be aware that although outsourcing can be very beneficial for your company, it does have its pitfalls. Below is a summary of outsourcing along with its advantages and disadvantages.
Out-Source
There are indeed a number of advantages to outsourcing. For example, outsourcing can be a quick and expert way to get tasks completed. This is because most outsourcing providers have equipment and resources that are much better and specialized than the company wanting the outsourcing does. Thus, tasks can get done fast and at a high level of quality. Also, outsourcing the supporting tasks to an external provider can allow your company to put more focus on the main tasks at hand. Additionally, risk can be diminished by using outsourcing. By delegating certain tasks to an external provider, you can spread out the level of risk, weakening it overall, especially since the outsourcing group will be experts at planning any risk analysis involved in the tasks they perform. Finally, by outsourcing, the company can now cut down on its operating costs as well as the cost of recruiting extra workers in-house. This has been recognized as being one of the best benefits of outsourcing.
In-House
Aside from the option to outsource, some companies still prefer to do a lot of in-house production of tasks. There can be some attractive advantages to keeping things in the family. For example, when tasks are kept in-house, certain types of data such as payroll information and confidential employee information is kept private without the chance of the data being exposed to the public. Also, staying in-house can solve the problem of working with international outsourcing groups and the dealing of contracts. International contracts can pose serious threats to your business if they are not studied carefully. Furthermore, oftentimes an outsourcing group is simultaneously doing business with other companies other than your own, and so their focus on you may be lacking. So, by sticking to an in-house solution, you can be sure all focus will be on the company and nothing else. Finally, sticking close to home will ensure that a number of logistics issues are easily regulated, while being performed quickly and correctly, such as delivery times, output quality, and the proper structure of task responsibilities.
China’s Change
Over the past ten years, companies big and small are beginning to shy away from overseas outsourcing, such as to China, opting instead to bring it back home for a more in-house, or in-America, approach to business. For instance, just recently huge companies like Google and General Electric have decided to outsource certain facets of their company structures to locally-owned U.S. companies. Researchers state that there are many reasons why American companies are returning their production process back to home soil. One reason is gaining a good public reputation by keeping jobs at home. Another reason is political in nature, specifically for companies wishing to make it known that they are practicing anything even remotely resembling re-shoring. However, the biggest cited reason for why many companies are scaling back their outsourcing habits is because of the abrupt increase in wages in countries like China, who were formerly very low-cost areas to outsource to. But with much labor unrest unfolding, it is suggested that these foreign wages will only increase in the years ahead, thus having many more companies re-shore their production or else look to other low-cost countries to outsource to.
