What Are the Pros and Cons of Outsourcing?

Outsourcing is one of the most discussed topics in the business world. It is a big dilemma that the majority of entrepreneurs consider and then reach different conclusions, even when in seemingly similar situations. Why is this so? Well, because both pros and cons of going with outsourcing are logical and compelling. In order to help you make up your own mind, here are some of the biggest pros and cons of outsourcing in one place.

Pro: Fewer administrative tasks

The first reason why people choose outsourcing is the fact that they get to handle fewer administrative tasks. This means that they can focus on their core (money-making) tasks and leave these specialized processes to someone who understands them much better. Keep in mind that as a business manager, you’ll already have so much at hand that any kind of relief may make a difference.

Con: Lack of control

No matter how great of a collaboration you have with the agency that you’re outsourcing to, you don’t have direct control. This is actually one of the biggest concerns that the majority of entrepreneurs have when it comes to outsourcing. You have no control over the process but this is not necessarily as big of a problem. The fact that you can’t control the security or any potential PR blunder (that will involve you, as well) is far more serious.

Pro: Quicker results

In order to start an in-house department, you need to start with a hiring process. According to the people behind Katana IT finding and vetting people with traits that will allow them to become experts will not be easy. Then, you need to invest in order to provide them with the necessary tools for work and wait until they’re proficient enough. In other words, it will take quite a while until the team that you build becomes as proficient as the team that you hire.

Con: Regional issues

If you’re offshoring, you might find that the quality standards are not like they were at home. The workplace standards are also different in other regions, which is something you need to get accustomed to. Keep in mind that working with people from other countries also implies a potential language barrier, as well as a time zone discrepancy. These two are not necessarily a major issue but they do make communication and collaboration slightly more difficult.

Pro: Better hiring pool

One of the best things regarding outsourcing (especially if you are offshore) is the fact that you can hire talent across the globe. This means that you have the freedom to collaborate with any business whatsoever, regardless of their geographical location. Once you take this out of the equation, it will be quite easy to shop around and use the costs and portfolios of companies as the most important factors. The end result will always be more satisfactory.

Con: Security risks and hidden costs

Another issue lies with local rules, regulations, and security practices. Different countries may be notorious when it comes to the amount of public information that they have to disclose. Always research this before doing business with a company. Second, there might be quite a bit of hidden costs involved. To avoid this, read the fine print and have your lawyer examine the contract before you sign it.

Pro: Lower initial investment

When it comes to comparing costs, things are not always so clear and straightforward. For instance, while an in-house department is supposed to pay off in the long run, the truth is that outsourcing requires a lower initial investment. Moreover, chances are that outsourcing costs are easier to predict. Here, you pay X dollars every month and, if your contract is done right, you don’t have to worry about the unforeseen expenses (they are the responsibility of the other party).

Con: Weakening the local economy

This next problem is of a political, socio-economic, and even ethical nature. Namely, there’s a lot of talk regarding the fact that taking your business overseas, you’re actually weakening the local economy. If you hire a person from half a globe away to do the job that your neighbor could have done, you’re directly taking work from your own region and investing it someplace else. Still, examining things from this “bigger picture” perspective is not something that a small business has the privilege of doing.

Pro: Higher efficiency with specialized tasks

Remember that what you’re usually outsourcing are highly specialized tasks. We’re talking about IT, HR, customer service, etc. By hiring a specialized agency, you’re getting a much higher quality of service than if you were to start your own department. As we’ve already mentioned while discussing the quick solution, while your team may potentially reach this level of proficiency, there’s no way to tell when this will be.

In conclusion

At the end of the day, the choice to outsource will completely change your business model and open up a new set of exciting opportunities and options. It will unburden you from the administrative standpoint, lower the initial investment, and give you what you need at that instant. With in-house departments, you get more control and when it comes to scalable costs, eventually, you’ll hit a break-even point, after which the model will be cost-effective. The choice is yours.