Can you please give me the good and bad factors of Business Outsourcing?

Question

What are the advantages and disadvantages?

Answer 1

Advantages of Outsourcing

The Outsourcing market is estimated to grow tremendously in the coming few with an increasing number of companies planning to outsource both low end and high end jobs to offshore destinations. Also the number of companies providing outsourcing services is on the rise, thus resulting in larger variety. Due to the fact that more and more companies are outsourcing, the risks are getting smaller as businesses have more experience and clearer objectives.

There are several marked advantages of outsourcing:

1. Concentration on core business areas
Back office operations of a company require high maintenance and specialized attention. Yet most of them are critical for the company's everyday activities. By outsourcing their back office operations businesses can concentrate on their core competencies while their back office operations are being managed smoothly by a specialized third party company.

2. World-class technology at lower rates
Investing in new technology is very costly and often risky. As the technology market develops rapidly, it is difficult to keep up with latest innovations and solutions. Thus outsourcing to companies that have the resources, expertise and desire to continuously update their technological solutions, offers a true advantage of outsourcing.

3. Skilled manpower at affordable prices
Outsourcing gives a company the ability to get access to skilled and trained man power at extremely low rates. This in turn leads to an increase in productivity as well as cost savings. By outsourcing a company saves on recruitment, training and other human resource costs it would otherwise have to maintain internally. Also an advantage of outsourcing is that a company is able to utilize the kind of expertise it could not internally provide.

4. Increased productivity
By employing skilled manpower in larger numbers at lower costs companies can really increase their productivity. This in turn would result in better customer satisfaction and increased profitability.

5. Beat Competition
In today’s fast paced global economy a company needs to provide high-quality services to its customers in order to retain them, as well as provide the services for cheap prices. Outsourcing in this case can help the company maintain lower rates with better service solutions, thereby giving them a better market position or even a competitive advantage.

6. Tax benefits
By selecting the right BPO destination companies can save up on taxes in turn saving on costs.

Disadvantages of Outsourcing

Although there are several reasons in favor of outsourcing, a company must also consider the disadvantages of outsourcing. There are risks that need to be analyzed whenever a company embarks on a new business venture. Even though outsourcing is often the right solution for companies, one should not outsource simply for the sake of outsourcing. Several benefits and value addition have to be realized in order for companies justify outsourcing. It is a hot trend nowadays and seems an attractive option for many, but if the risks are not considered in detail, the disadvantages of outsourcing may dominate the advantages.

Lately however, the concept of outsourcing has been criticized. The negative attitudes toward offshore outsourcing have been mostly discussed by parties in the US and UK, due to job losses in the mentioned countries. Some people in countries like the US, feel that outsourcing is threat to their economy. Outsourcing jobs to offshore destinations, is causing unemployment in the minds of some people. It cannot be denied that the immediate effects of outsourcing such as lay-offs as well as the shifting of production and jobs to foreign locations causes problems many employees. Both high and low-end jobs are moving out of the US causing people to loose jobs. The needs of companies, national economies and those of individual people often clash.

The disadvantages of outsourcing may include the following:

· Loss of managerial control, because it is more difficult to manage outside service providers than managing one’s own employees working possibly in the same building.
· Often the hidden costs are difficult to calculate or prepare for. These include legal costs related to putting together a contract between two companies and the time spent to coordinating the contract.
· Another disadvantage of outsourcing can be a threat to security and confidentiality. If your company is outsourcing processes like payroll, medical transcriptions or other confidential information, a company must be very careful in choosing which process it wants to outsource and to which provider.
· A possible loss of flexibility in reacting to changing business conditions, lack of internal and external customer focus and sharing cost savings may also be a disadvantage of outsourcing.
· Other disadvantages of outsourcing may include unfavorable contract lengths, loss of competitive edge, problems in contract renewal, and contractual misunderstandings.

Answer 2

The Advantages of Outsourcing:

Swiftness and Expertise: Most of the times tasks are outsourced to vendors who specialize in their field. The outsourced vendors also have specific equipment and technical expertise, most of the times better than the ones at the outsourcing organization. Effectively the tasks can be completed faster and with better quality output.

Concentrating On Core Process Rather Than The Supporting Ones: Outsourcing the supporting processes gives the organization more time to strengthen their core business process.

Risk-Sharing: One of the most crucial factors determining the outcome of a campaign is risk-analysis. Outsourcing certain components of your business process helps the organization to shift certain responsibilities to the outsourced vendor. Since the outsourced vendor is a specialist, they plan your risk-mitigating factors better.

Reduced Operational and Recruitment Costs: Outsourcing avoid the need to hire individuals in-house; hence recruitment and operational costs can be minimized to a great extent.

Answer 3

HI, FIRST OF ALL "DEEPA" HAS NO CLUE WHAT YOUR TALKING ABOUT.

BUSINESS OUTSOURCING IS TO DELEGATE SPECIFIC FUNCTIONS TO OTHER COMPANIES WHO SPECIALIZE IN HANDLING THOSE SPECIFIC FUNCTIONS FOR SEVERAL OTHER BUSINESSES.

ADVANTAGES ARE SPEED AND ECONOMY

DISADVANTAGES ARE RELIANCE ON OTHER BUSINESSES (REPUTATION, QUALITY ECT.),
AND POTENTIAL LAYOFFS MAY BE NEEDED TO TAKE FULL ADVANTAGE OF THE ECONOMIC BENEFITS OF OUTSOURCING.

I USED TO WORK FOR HEWELETT PACKARD IN THEIR INSTRUMENT DIVISION AS A RESEARCH AND DEVELOPMENT TECHNICIAN.

WHEN HEWLETT PACKARD SOLD THAT DIVISION TO THE CHINESE, I WAS LAID OFF, BECAUSE THE CHINESE MOVED ALL OF THE EQUIPMENT AND INFORMATION AND MACHINERY TO MALAYSIA WHERE THEY CAN GET SOMONE TO DO MY $36 AN HOUR JOB FOR $300 A MONTH.

I HAVE NO HARD FELLINGS AGAINST ANY OF THEM BECAUSE OUR DIVISION, WHICH WAS THE BACKBONE OF THE COMPANY FOR MANY YEARS, HAD A 50% FIELD FALIURE RATE AND EVERYONE THERE WAS MAKING ALOT OF MONEY, WAY MORE THAN THEY SHOULD, THAT'S THE PROBLEM WITH AMERICAN UNION LABOR, PEOPLE JUST WANT MORE AND MORE MONEY FOR DOING THE SAME THING,

OUR DIVISION WAS A DRAG ON THE COMPANY, THE CHINESE BOUGHT IT BECAUSE THEY KNEW THAT THE PROBLEM WAS AMERICAN UNION LABOR.

MORE AND MORE COMPANIES ARE DOING THIS AND THE RESULT IS THAT THERE ARE FEWER JOBS IN AMERICA AND MORE, LARGE RICH COMPANIES.

BUT PERSONALLY I DON'T BLAME THEM BECAUSE UNIONS DON'T KNOW WHEN TO STOP, THEY USE THEIR ABILITIES TO EXTORT MONIES FROM THE COMPANIES THAT THEY DEAL WITH.

SO BASICALLY THE REST OF THE WORLD CAN MAKE STUFF, THE WAY WE TELL THEM TO.

GET A BUSINESS DEGREE, NOT AN ENGINEERING
DEGREE, THAT WAS THE IDEA.

BUT THEN COMPANIES STARTED APPLYING THE IDEA TO MANY IN OFFICE PROCEDURES AS WELL, TO SAVE MONEY AND DECREASE THEIR NEED FOR PERSONNELL.

IT'S NOT HARD TO JUSTIFY LAYING SOMEONE OFF IF YOU CAN REPLACE ALL OF THEIR FUNCTIONAL PRODUCTIVITY AND SAVE SUBSTIANTIAL AMOUNTS OF MONEY IN THE PROCESS BY EITHER OUTSOURCING THEIR JOB TO ANOTHER COMPANY OR AUTOMATING THEIR JOB SO THAT MACHINES CAN DO IT. OR PERHAPS A LITTLE OF BOTH. THIS IS ESPECIALLY TRUE IF THE PERSON IS ANNOYING.

WETHER THESE FACTORS ARE GOOD OR BAD, DEPENDS ALOT ON YOUR POINT OF VIEW.

I WISH THAT MANUAL LABOR WAS OUTLAWED, AND THAT EVERYONE OWNED SEVERAL ROBOTS, THAT DID SEVERAL JOBS, MAKING SEVERAL INCOMES.

THE WAY THINGS ARE GOING I MAY GET MY WISH.

Answer 4

advantage:
you don't hire full time people so you're not stuck with them.
ie you can effectively 'fire' them when the job is over.
might be cheap if outsourcing to a low labor cost location
cost is known if you can do it by fixed cost contract

disadvantage:
you may have less control since it's not being produced by your business
you can't change as quickly in the middle of a project
the employees aren't loyal to your company
unions tend to get upset and it's negotiable

those are a few

Answer 5

Disadvantages: It takes jobs away from people in your own country.
Advantages: It makes some business ideas financially possible that wouldn't be possible if you had to pay higher rates to people in your country. And, it gives you more money to be able to spend in your country and this helps the economy of your country.

Answer 6

disadvantage is u et to spent very little time with ur family..................there wont be time for a personal life.............