Globalization has transformed the whole IT business scenario and the way of doing business has changed a lot. There are no more limitations that were earlier imposed by geographical borders. This has increased the scope of global IT outsourcing whereby businesses contract out their back office tasks to BPO companies located in India, China, Malaysia, Philippines, Thailand, etc. to enjoy the benefits of outsourcing. It has been an asylum for many businesses and the phenomenon has immensely helped them in many ways. Some of the key advantages and disadvantages of business process outsourcing are explained below.

global outsourcing benefits

Advantages & Disadvantages of outsourcing

What is outsourcing?

Outsourcing means “to source out”. In other words, outsourcing refers to the practice of securing products and services from a company that is based in a foreign country. Outsourcing is a common practice in industries that face labor shortage or the dearth of workers who possess specialized skills in specific domains. Outsourcing is also a solution for companies that look for cheap labor and want to increase the return on their investments.

How can outsourcing benefit a company?

Companies primarily choose third party outsourcing companies in order to cut costs and streamline their operations. However, in modern times, offshore outsourcing has evolved to assume a new makeover. Today, businesses seek outsourcing support rather insourcing to get access to talented resources from developing countries at a fraction of the cost that they might need to pay if they hire from their own countries.

By allocating some of its key day-to-day tasks to an outsourcing service provider, a business can reduce its own overhead expenses on deploying in-house infrastructure and in-house staff.

Companies that provide outsourcing services deploy advanced infrastructure, robust data security systems, and highly-qualified employees. So businesses that choose to outsource want to capitalize on the competitive advantages of the outsourcing service providers.

With this option, companies can forego the idea of spending money on hiring and training specialized staff as well. And all these benefits sum up to reduce costs and improve profit margins.

What can be outsourced?

Any job can be outsourced.

However, most companies that opt for outsourcing choose to outsource those roles that are meant to support the central role of the company and to help it in the accomplishment of its strategic vision. Companies also outsource their day-to-day, repetitive works to other companies so as to de-clutter their schedule and focus on more important work.

The job sectors that are commonly benefited by outsourcing are Manufacturing, Distribution, Research & Development, IT Services, and Call Center support.

Top Advantages of Outsourcing

  • Access to talented workforce

    One of the main reasons that prompt business to outsource is the need for skilled expertise. There are certain tasks that are not directly associated with your main business but still crucial. At the same time, you may not have in-house people to do the job perfectly. Outsourcing to India is the right thing to do in such a situation.  

  • Focus on core actions

    If you want to focus completely on ensuring quality products and services, complete devotion should be towards improving your main business incrementally and relentlessly. For the same, offshoring non-core tasks to a professional company offering outsourcing services is crucial. This reduces workload and you can divert key resources with you towards tasks in which they excel.

  • Risk Management is made more effective

    By strategic outsourcing, risks associated can be shared with outsourcing partners thus minimizing the burden on you. When you rely on skilled people in outsourcing companies, risks for the concerned tasks rests on them and they are accountable for the outcomes.

  • Enhancing the efficiency of in-house staff

    You can increase the effectiveness of your internal team by relying on a company providing offshore outsourcing services as their workload is decreased. They will feel more comfortable to perform even better thus helping your business to gain more acceleration. Otherwise, pushing in-house team beyond a limit brings in adverse impacts only.

  • Your business stay active 24/7

    One of the main benefits of outsourcing to India is the difference in time zone. Your company can stay live 24 hours a day. When your employees leave to take a nap, the outsourcing people take over to continue the work. They complete tasks assigned which can be reviewed the following day

  • More flexibility in staffing

    You get huge financial flexibility in staffing as there is always uncertainty in the demand for certain tasks. You can do the needed scaling, as per the need. With a lesser expenditure, you can run your business even during holidays and offseason by choosing the right outsourcing partner.

  • Better customer services are ensured

    Skilled people to whom you outsource can deliver results with quality within the shortest turnaround time. This obviously makes customers delighted and increase their level of satisfaction. Ultimately, your loyal customer base keeps on swelling.

  • Enjoy cost savings

    It lowers costs and ensures big savings. When you contract out expensive tasks like customer support, HR, data entrygraphic designing, medical billing, video editing, prepress services, etc. to destinations like India, you get quality services at lower costs. You need not maintain an infrastructure for such activities

  • Your business gains the competitive edge

    By outsourcing, not just better quality services are obtained but also the in-house resources are utilized effectively. Thus overall productivity is increased. At the same time, you can surpass the competitors who are yet to embrace outsourcing.

Top Disadvantages of Outsourcing

  • There might be a lack of control due to outsourcing, as companies often hire a freelancer or agency without directly hiring the outsourcing firm. Hence, it can be avoided if you directly contact the firm without going for any third party.

  • Miscommunication is also a common issue that can occur due to many factors which can be avoided if you hire a company with the multilingual support desk. The company will have in-house multilingual executives responsible for handling global customers queries in their native languages.

  • Another disadvantage of outsourcing is that the product quality may get affected. This can also occur as a result of improper communication. However, you can overcome this kind of problem if the outsourcing company you hired focuses on providing satisfactory attention to understand client’s need and project requirements.

Final Thoughts

Although there are a number of reasons why outsourcing can prove beneficial for your business, there is always a possibility that it might not work as the best option in case of some situations. However, this can be avoided if you take the right decision while keeping a complete knowledge of the advantages and disadvantages of outsourcing.

Thus by outsourcing, customer loyalty boosts, quality enhances, business values elevate and productivity and profits increase. So, your business keeps on growing.

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