Benefits and drawbacks of outsourcing for businesses

Introduction

A lot of companies are expanding their work by switching from in-house employees to outsourcing. At first glance, this is a fantastic way to grow your business. However, there are some limitations your company can face using this business process that must be carefully considered. Let’s talk more about some of the biggest benefits and drawbacks of outsourcing.

Benefits and advantages of outsourcing for businesses

Access to a larger pool of resources

It’s not always easy to find employees in-house or near your office. And even if you find someone to help your business, that could take a lot of investment. Sometimes it’s just not worth it. With outsourcing, you have many more options you can choose from. This way, you will end up with someone who suits your business the best.

Increased competitiveness

If your business struggles in a highly competitive niche, it is super important to stay up-to-date with new technologies, trends and solutions. Looking for educated and experienced people is much easier if you are not restricted within your company or even country. By connecting with more skilled people, you’re increasing your chance of becoming a representative in your niche.

Improved customer satisfaction

Don’t forget that your customers (and competitors) notice every difference in your way of work. Every good or bad change won’t stay unnoticed. And since everyone is talking about user experience more than at any time in the past, this is the perfect moment to work on it. 

More skilled professionals lead to a higher degree of competence. And this may lead to a better customer experience, improved customer loyalty, and a better reputation for the company.

Increased cost predictability and budget control

According to a report by the Society for Human Resource Management, it costs around $4,700 and 42 days to hire an “ideal” employee. Besides, when recruiting someone for a role in your company, you’re not just responsible for their salary. You will have to deal with other expenses like: 

• Job Board Fees
• Advertising
• Interviews
• External Taxes
• Internal Recruitment Expenses and more!

Business process outsourcing cuts all of these unnecessary expenses and provides you with a clear view of your budget helping you save a lot of money and time.

Focus on core business operations

Let’s say your company works on SaaS. In this case, your focus is on web and software development. Repetitive tasks like bookkeeping, back office tasks or maybe customer support are just a huge waste of time. By outsourcing some of these tasks, you’ll be able to focus on core business operations. Furthermore, this will improve your efficiency not just on these repetitive tasks, but also on your main project.

Drawbacks of outsourcing for businesses and how to get over them?

Quality control issues

When you’re looking for a potential outsource workforce, keep in mind that responsibility is a much bigger deal than it is in-house. When you’re working with someone in the same office, you can always see what’s their progress and how they do it. But, on the other hand, that’s hard to track with someone who is outsourced. 

How to solve quality control issues in outsourcing?

An irresponsible person can lead to missed deadlines and slowed processes. So, if you’re outsourcing for important projects, be careful who you choose to collaborate with. 

After discovering the perfect candidate for your business, build a metric system for progress and goal tracking. This way you or external collaborators can control quality and work on its improvements. 

Occasionally quality checks are another thing that you should do. If you are working with an outsourcing company, most of the time this is their part of the job, and we at BlueGrid.io take this process seriously.

And, as always, communication is key in situations like this. So let’s talk more about that.

Communication challenges

Most of the time, your external vendors will act as a third party. With that being said, sometimes every sort of communication will go through their hands. But due to misunderstandings, language barriers and time zone differences, it’s not always easy to follow this business process.

How to solve communication challenges in outsourcing?

All in all, if your business requires 24/7 connection and track of everyday tasks, you need to either find the right outsourcing company for you or find someone on your own.

It’s a good idea to establish a communication platform and ask for updates and reports. And as we said, these check-ins are not only good for better communication but for quality control too.

We talked about language barriers too, but in practice, this is rarely a problem. Most of the time, the communication language is English, widely known and used. 

Loss of control over processes

Loss of control is probably one of the biggest perceived drawbacks when we’re talking about outsourcing. This perceived drawback is connected with the “quality control issues”. It’s hard to stay in touch with what is going well and what is not. That lack of insight can lead to numerous side effects for your business.

How to solve the loss of control in outsourcing?

Since, in most cases, it is just a perceived drawback, the most efficient way to stay in touch with the constant progress is to make an agreement with an outsourced person or vendor to get daily, weekly or monthly reports of what is done and how. When, even in in-house teams, we feel that control is being rather loosely held, we must find that one attribute that needs quantification to get the control back.

This way, the business team can track and follow a map and workflow. Monitoring and supervising are super easy, and even not always necessary. You can save time and money, but also be sure of the quality of delivered work.

Potential cultural differences

Cultural differences between a company and an external vendor (or between the company and an outsourced person) could cause some problems primarily in communication and delivered work. Misunderstanding and language barriers, as we mentioned, can lead to missing deadlines, getting unwanted or wrong products, etc. 

Cultural differences can also affect how work is done, which can then affect how efficiently a business operates as a whole.

How to solve the problem of cultural differences in outsourcing?

The most acceptable way for solving this problem is simply by introducing a company to an outsourced individual. This is where the external vendors can help you because they often present the company to a new member. The potential cultural gasp is crossed and, over time, it will only get better.

Businesses might also think about investing in cultural training and education. Check with your chosen vendor how they solve this type of problem and then see if that fits your company.

 Luckily, the world is getting smaller with all the different connectivity options like social networks, remote work, etc. With the world getting smaller, cultural differences are also shrinking, at least in scopes that really matter.

Security and Intellectual Property Concerns

Companies are occasionally working with confidential data, so it’s completely expected to ask if it is safe to share private information with strangers. The worst scenario for the company is to face problems like reputational damage, income loss or some legal issues.

How to solve the problem of Security and Intellectual Property Concerns while outsourcing?

In order to protect private information, companies must make sure that their external vendors (outsourcing companies) have strong security procedures in place. Furthermore, make sure to check not just how vendors prevent problems, but also how they solve them if they happen. 

Companies may consider working with outsourcing providers who have a proven history of protecting confidential information and intellectual property.

Also, it’s important to make a good and clear proactive strategy about which information they can access and use.

Final word

Nothing is perfect, and that’s a fact.

The question businesses should ask is not “Is this the ideal solution for my problems” but rather “Will this investment help”.

And of course, there are many more pros and cons when we are talking about outsourcing. These are just some of the most frequent problems outsourcing can solve or face in practice.

Are they worth it? It’s up to you!