Side Navigation

Understanding

Pros and Cons of Outsourcing

The term outsourcing has increased in popularity in America. Outsourcing is not for use in manufacturing only because it is possible to connect with a person in another nation on customer care line. However, being popular is not an indicator of outsourcing being an all-time option. Outsourcing has its good and bad sides as the article below explains.

Outsourcing is helpful since it helps one to cut labor costs. Among the most important determinants of the price of a commodity is the labor cost. Prices at which companies do offer their products are determined by the much its labor costs. America has a higher cost of living, making factories to spend a lot in wages. However, the cost of living is lower India and China, meaning staffs can be paid lower wages and meet their needs. This makes the cost at which products are manufactured, making the price at which manufacturers offer their products more competitive.

It is helpful to outsource because it avails more hours. While Americans work for 40 hours a week, technical issues are unconcerned with matters of time. If this company wants to provide customer support in-house, its offices would need staffs to work 24/7, meaning you could operate with a three-shift program. Employees who work at mid-night get disorders such as insomnia, difficulty with personal relationships, difficulty in concentrating, irritability, lack of energy, and insufficient sleep. For India, American midnight will be day time and it will not be a big deal for people responding to customer service at India. As a matter of fact, some IT companies subcontract services to all time zones to maximize the time they offer services.

When you outsource, you are disadvantaged since you have less quality control. When your company does everything in-house, you can perform the quality check by walking around. Outsourcing from a different country makes it tough to control quality. Therefore, issues can be taking place for weeks only for you to notice them as customers complain or you decide to fly overseas to see the progress.

It is not advisable to outsource as this lowers employee morale. When employees are not secure in their jobs, company morale gets damaged. Upon starting to outsource different services overseas, the remaining employees begin to feel insecure. The staffs tense and embark on the search for better jobs.

Cultural barriers disadvantage outsourcing. Value systems differ slightly in different parts of the world and what is acceptable in a region may be a taboo to another. If the outsourced company does not have the same cultural values as your business, they may have different business priorities hence causing problems. Also, language barrier brings about frustrations among service providers and customers.

You May Also Like