Welcome to your online guide on the top 3 advantages and disadvantages of outsourcing. If you are here, reading this, it clearly means you are in the business of knowing what is right for your business and are a keen follower of current business trends that spell success. Let’s begin with finding out what outsourcing really is, so we know where we stand when advantages and disadvantages of outsourcing are mentioned.

Understanding outsourcing and advantages and disadvantages of outsourcing: At the most basic level, outsourcing means offering a business responsibility to another company located off-site, typically in another country or even another continent, that has the qualified personnel and business models in place to mean major cost-cutting, time and labor-saving for a foreign based business. It started as a trend as early as 1950’s but took off as a preferred business expansion approach in the 1980’s with many developed countries deciding to take up the offer of outsourcing and its seemingly big goody bag of cheaper solutions that were guaranteed to boost productivity! We say ‘seemingly’ because that’s the way outsourcing was projected as being by developing nations to the foreign business owners (some of whom were major players like GE and Dell, outsourcing to relatively unknown start-up outsourcing partners in India, the Philippines and China) – but it needed to be done right to have the right results. Thus, the advantages and disadvantages of outsourcing, as the sales figures and growth charts for both these big names reflect, are closely linked to their choice of outsourcing partner in the developing country that promised it major cost-cuts, which had a hand in raising productivity by reducing labor costs by 50% or more.

These countries could offer many advantages and disadvantages of outsourcing at the same time, including

Advantages:

1. Round-the-clock technical or customer support

2. 50% of cost-cuts due to cheaper availability of qualified work force

3. The possibility of changing over from a fixed labor cost to a variable one, if required by the outsourcer company

Disadvantages:

1. At times, the language skills and communication development did not show the same results with every team-player in the outsourcing company

2. Risk of complacency setting in with the lack of regular management training techniques made available to the outsourcing agent

3. Risk of fraud and confidentiality issues cropping up due to lapses in ethical work code enforcement.

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