Outsourcing of jobs has quickly become a controversial issue, with some people hailing it as a next major step in business and some calling it the second depression and recession for workers. Most economists are sure that this animosity is just temporary and will die as conditions develop and people start taking a mature look towards outsourcing.
Companies should adopt a planned approach towards outsourcing and take into consideration the interests of employees, customers and vendors and come up with a reasonable plan. Outsourcing has many advantages but at the same time if not conducted properly can have major disadvantages that cannot be disregarded.
Advantages of Outsourcing
Concentrate on core competencies Gain access to foreign markets Stimulates trade and actually creates a stronger economy Achieve cost reductions - companies can save up on operational costs and can cut their operating costs to half by outsourcing Obtain expertise- from outside the organization; companies can get access to better technologies at a lesser cost Reduced labor cost- companies can access cheaper and more efficient labor and cut up on labor training cost All round quality- Improve the quality of services, efficiency and productivity Vendor expertise—the outsourcing vendor has years of experience in providing this type of service to the industry and can help you get started quickly and offer experienced ideas. No staffing concerns—you don't need to staff up the vendor bears the overhead of maintaining a trained staff to run the business. No new equipment—no additional computers or office equipment of any kind. The outsourcing vendor should provide the technology needed.
Disadvantages of Outsourcing
Companies can get into serious difficulty if the vendor refuses to finish work due to bankruptcy, lack of funds, labor etc The company may loose control over its process as outsourcing requires the control of the process being transferred to the vendor. Outsourcing won’t overcome bad management A threat to staff morale, current employees in the company may feel threat due to outsourcing and may not work properly The attitude of people in the developed countries against companies that outsource is generally negative Companies that are dealing with trademarks, or classified information outsourcing may put their work and privacy in peril
