The Pros and Cons of Outsourcing

Published: 31st March 2010
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Outsourcing services and repetitious tasks has become very popular as business managers, blog owners and Internet marketers almost everywhere are falling all over themselves to hire outsourcers in other countries to handle their overloads or everyday tasks.

Even the Federal Government is going to use outsourcing services in India to take care of managing their newly approved health care reform package.

One major consideration will be how to manage your offshore operation as effectively as you can when it is in-house. When customer problems arise, you need to solve them quickly before they ruin your reputation or reduce your sales. If the affected department is on the other side of the world, you will be dealing with differences in time zones, unexpected holidays and impersonal email or phone communication. You will not be able to walk down the hall to directly address the people you need to reach.

The major benefit tradeoff for outsourcing is the amount of money you can save because of the differences in salaries, mandated benefits and operating costs between offshore destinations and the US. When tasks other than those related to the core business are successfully outsourced, your focus can shift to improving your sales and marketing campaigns.

One huge risk is that your trust in a third party to maintain a certain level of quality or quantity of whatever you've contracted to be created or delivered can be a hollow trust if your provider fails to deliver as promised. Even though you have the appropriate Service Level Agreements signed and delivered, they are relatively ineffective when your outsourcer is thousands of miles away.

One way to avoid choosing an unreliable outsourcing company is to use brokers who act as the middleman between you and the service providers in other countries. Companies with larger needs might have multiple brokers working to find them the best solutions for their needs. Additionally, another solution to avoid costly mistakes would be to hire a company that is an outsourcing solutions provider. It would be a good idea to check out all possible contractors, including their management and any brokers or other solution providers you are interested in hiring.

Successful businesses run on their good reputation and, if you are going to consider outsourcing you will have to ensure that your reputation stays on the positive side. Most of the general public believes that outsourcing their services and products offshore takes away jobs from the domestic work force. Your own employees might be less than happy about moving business processes to other countries and consider it a tactic that will reduce their chances for promotion or salary increases. Some of your clients might have become a client of yours because of your domestic presence and will consider changing their association with you.

If your level of service provided to your clients remains the same or actually improves, your clients will more than likely stay with you. Offering education and opportunities for advancement to your own employees will lesson their own nervousness about their future with your company. When the money saved by using outsourcing to reduce costs is used to make business improvements and hire new employees, the atmosphere in the local community will relax.

One more thing to consider is the true value of your company's basic organization, including personnel and their knowledge that makes your business work the way you want it to. Choosing the right processes to outsource is critical for the success of your business. Making that choice is not as simple as outsourcing the department that gives you the most trouble or costs the most money. Careful consideration of the pros and cons of outsourcing and department or process might include the help of a company skilled in finding the best match for your needs.

Naturally smaller companies find it difficult to compete with the domestic support and services that larger companies are able to provide to their clients. Outsourcing levels the playing field and can provide a "large company" profile by providing the same cost reductions and efficient processes that are normal for larger businesses.


Kathy Dobson is a free spirited business owner and entrepreneur dedicated to helping others achieve financial and personal freedom through Internet marketing with an emphasis on membership sites.
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