Choosing to outsource can save companies money, keep them more agile and give them access to a wealth of global talent. However, it also incurs certain risks. Here we explore the various pros and cons of outsourcing to see whether or not it might be the right choice for your business.

 

What is outsourcing?

Outsourcing is when companies choose to have some of the business functions, services or tasks done by a third party individual or business. Regardless of the job task, be it marketing, HR, IT or customer services, there is the option of outsourcing.

 

What are the benefits of outsourcing?

In many cases, businesses can benefit from the following pros of outsourcing: 

  • Cheaper – a key reason why companies choose to outsource certain tasks is that they only need to pay the salaries of the core team and then pay to delegate certain tasks as and when they arise. By helping businesses to save money, this also frees up capital to spend in other areas of the business.

 

  • Greater flexibility – outsourcing enables companies to get the services they require as and when they need them, allowing them to keep up with changing market conditions and meet different company priorities at different times.

 

  • Specialist service and global talent – outsourcing tasks to specialists means that the job is done by someone who is a professional in their field. It also means that businesses are not restricted by location – they can outsource to anywhere in the world and access talent.

 

  • Free up more time – when choosing to outsource certain tasks, it allows businesses to focus on the daily running of their business without the need to learn how to do new tasks.

 

  • More efficient – it can be far more efficient to outsource a task as and when it is needed, especially for tasks that occur infrequently and that are not essential for the daily running of the business.

 

  • 24-hour service – when you outsource, you can take advantage of different time zones so that you can offer your customers 24/7 service, even in the hours that you are asleep.

 

Are there any disadvantages to outsourcing?

When you outsource, it hands over direct control of a task or business function to a third party which incurs a level of risk. Outsourcing sometimes might come with issues such as:

 

  • Confidentiality and security risks – when sharing information with a third party, you need to consider the implications for information confidentiality and the safety of the data  
  • Service delivery – if the third party company fails to deliver the work on time or the work is not up to scratch, it will be your business that takes the fall and has to suffer the consequences. 
  • Lack of knowledge – the freelancer or company you choose to outsource to does not know your business inside and out which means that the work may be done differently than by someone doing it in-house, certainly in specialist areas such as compliance and regulation or those with skills in IT, engineering, health or finance.

 

  • Trusted business – when you outsource, you put a great deal of trust in a company or individual to complete the work to the right standard and to a given deadline. However, you never know what could happen. For example, the outsourcing company could go out of business before completing the job.