In simple words, outsourcing is a process through which a company hires another company to do part of its jobs. Outsourcing agencies mainly complement recruiting agencies in terms of expertise and time. It has been quite a common practice among business people, especially startups. There are valid reasons for that. Let’s take a look at the pros and cons of outsourcing.
Top 9 Reasons Why Outsourcing is Good
- Complementary feature
Outsourcing is worldwide famous due to its additional feature. It provides you with the expertise, time, and other crucial things you lack for business. - Low labor cost
A study shows that outsourcing can help you by saving 60% on overhead expenses. If you are on a tight budget, you might think of lowering its price. - Access to a different expert pool
Hiring and training people is time-consuming. Instead, accessing a readymade pool of experts is smart. - It helps Focus on core business issues.
Outsourcing part of your jobs relieves and enables you to focus on core business issues. There are other business issues to work on. Engage your ability for those. - Efficiency in a specific job
Outsourcing agencies provide you with the most exceptional work as they are efficient in particular tasks. Cheap labor doesn’t always mean consistent output. - Different time-zone advantage
Hiring various time-zone agencies benefits you in several ways. The agency can work on your behalf when your company is closed, or your workers enjoy a festival left. - Relief from stuff problem
During high time, being short of stuff is no longer your tension. There is somebody else to look into the matter. - Provide infrastructure support
For a vast number of working people, you needed further infrastructure development. Without developing an extension to your infrastructure, you are availing it by hiring an outsourcing agency. - Sharing risk and responsibilities
The idea of sharing the risk and responsibilities make your business things easier. No need to worry anymore if you have handed it over to a panel of experts.
Related: Startups Cannot Live Without Outsourcing
Like everything else, outsourcing too has disadvantages. It’s good to know before you make a decision.
A Few Disadvantages of Outsourcing
- Confidentiality matters
It is pretty worrying if your contract gives the outsourcing agency the right to see the company’s data. Make sure to hire a reputed company in this regard. Keep terms of your agreement for unwanted data leakage. - Losing managerial hold
While assigning a specific task to an outside company and enjoying relief, you lose the administrative grip. That is no more your concern unless they fail anyway. - Cheap output
Along with cheap labor comes the tension from cheap production. Outsourcing agencies work at a lower cost. For this, they might sometimes compromise with quality. Though generalizing is not a good idea. - Hidden cost
The Hidden cost is widespread in marketing. Ensure you read the contract paper in detail and don’t miss any hidden charges. Extended work period also causes increased cost facts. - Sharing financial burden
Sharing risk and responsibility is a relief but sharing the financial burden is not that good, primarily when you are related to the well-being of another agency. - Time zone again
Time-zone sometimes gives you worries. It is often difficult to synchronize the less similar schedule with different time-zone agencies. And thus, the work deadline may be disturbed.
The pros and cons of outsourcing, in a nutshell, are up there. However, you need to consider a few things if you are a startup.
Why Outsource? [VIDEO]
Related: 7 Things Startups Should Know About Outsourcing Development
Ten things a startup should know while deciding on outsourcing
- Make an intelligent choice of tasks for outsourcing
It is the most important thing for a business startup to focus on while outsourcing. Find the functions of your company that an agency can do better. Survey the market and be sure of your choice. - Be specific about the tasks.
Be particular in describing your responsibility. It lessens any unwanted hassles. Ask the agency to write assignments precisely in their contract too. - Careful while selecting an agency
The reputation of any agency matters in the market. So it is wise to be cautious with the selection of outsourcing agencies. Do a detailed survey if possible and make an intelligent choice. - Mindful reading of contract paper
The exact text of the contract paper would save you in many ways. You will get to know your partner well. Make sure the written document does not have nonconformity with the given contract. - Penalty for unwanted data leakage
Since confidential data is the heart of a business, including a sentence for unwanted data leakage is better. This will the agency make the agency concerned about the leakage issue. - Don’t compromise on efficiency issues.
Finding cheap labor is okay for reducing costs but don’t compromise on efficiency issues because an efficient agency would earn you several returns. - Find complementary support
Specify lacking in your company. Therefore find an agency that can provide you with mutual support against your lacking. - Ensure enhanced return
Once you find an efficient agency, it becomes more comfortable for you. A competent agency assures they enhance returns. - Avoid long periods of working.
A prolonged period of work may not always turn effective. Choose a partner and provide a task for a limited period. You may take the partner with you for the long term if found support is helpful. - Before any decision, survey market
The survey is best for making a decision. Choosing blindly may have you hit unexpectedly.
In our current reality, where you’re required to be imaginative, profitable, and determined to slice through the clamor, deliberate outsourcing is your primary key. If you’ve attempted it in the past, however, didn’t get the outcomes you needed, don’t lay down of arms.