For a certain company that intends to improve the quality of the service by generating lower labor costs, carrying out an outsourcing process seems to be a great alternative to meet what it needs. As this trend becomes significantly more popular in today’s business world, some have raised doubts about its effectiveness, sparking much debate. In an environment as changing as the one we have today, what is significantly advantageous for one can be treated as a disadvantage for another; which implies that things really vary from the perspective of each one. The same perception applies to outsourcing. So what one needs is a clear understanding of the pros and cons of outsourcing.

Obviously, one of the main reasons and probably believed to be the most influential factor why companies choose to outsource is to reduce costs and generate potentially greater cost savings. Secondary tasks and functions such as back office operations, management and administration, human resources and the like, which appear to be more expensive when performed in-house, are usually outsourced as having an external service provider is relatively cheaper in terms of labor wages. than that of an internal employee. Operating and overhead costs are also reduced in the procedure, resulting in increased profitability and savings of approximately 20 to 60 percent, subject to some considerations.

Another benefit that can be gained through outsourcing of non-core activities to a service provider is the opportunity for a company to focus on its core business whereby efficiency and productivity can be ensured. As you allow the third-party service provider to do activities that your company does not specialize in at all, you will definitely have the opportunity to focus and do well in your expertise. That way, the efficiency and management of work within the company can be monitored easily and flexibly. Once this is achieved, it can serve as a competitive advantage.

In addition, outsourcing generally contributes to the economic aspect of the countries. Specifically, it opens up potential job opportunities for a number of unemployed job seekers and even full-time employees. In addition, it allows great access to a number of specialized skills and up-to-date technologies that your business might need.

Meanwhile, there are also drawbacks brought about by outsourcing. The first thing to keep in mind once you get involved in such a process is that the company now does not have full control over the outsourced functions, and that you are putting a part of your business under the responsibility of someone else. There are unwanted situations in which the quality of work suffers and is compromised by the service worker. In cases where resources are wasted and inaccuracies arise, the company’s reputation could be put at risk, which can be a reason for losing customers and thus result in the observation of severe loss in sales and Profits.

In addition to the loss of income, the increase in the unemployment rate due to the loss of jobs for people, especially in the customer service industry of the countries of origin, is also a negative result of the process, since the Companies will now prefer to send jobs abroad and have a third party service provider work for them in a much cheaper approach.

Sensitive information, sensitive data, intellectual property and other security issues can be exposed to great risk, such as bankruptcy, when the provider is not carefully evaluated and spells trouble for all businesses. Other factors that are reflected as disadvantages include language and communication barriers and cultural differences. These small but crucial factors usually greatly affect the process. Poor communication between the two parties involved resulting in poor product quality and low precision is basically a result of such barriers.

Knowing and understanding the differences between the pros and cons of outsourcing is a very important yet crucial matter, especially for those who are just starting their business. Sure, this process can be valuable, but on the other side of the coin, it can also be risky. As indicated above, perceptions of the process vary; and in a greater sense, its effects also vary depending on the industry itself and the purpose for doing it. In the end, the first thing to do is a careful evaluation of these possible outcomes. With just one click on the internet, now you can easily get the opportunity to read useful resources that can give you more knowledge about the pros and cons of outsourcing.