There is great change in the competitive environment of business, this compels business organizations to adapt to the new strategies and innovate with aim of sustaining generation of revenue and they remain to be competitive. Outsourcing may stand for the act where one contracts part of their duty to another vendor though at a lower price.It is purposely done with the aim of lowering the cost and revenues and with the aim of expanding to the new markets; organizations have embraced the principles of outsourcing (Steven 34).
Several organizations normally outsource their work to the third world economy where there is an abundance labour and cheap resource. Economists give outsourcing a view as a new type of international trade. If you compare the past and now, more items are being traded now.This could be advantageous or disadvantageous on differing perspectives. Most U.S citizens have the assumption that skill, job, experienced and money are being outsourced for the foreign countries. They view that the economy of U.S will stagnate while the other recipient countries make socio-economic development and financial progress (Nicholas 14).
I support that outsourcing still stands to be bad as it changes the historical model of the economies of scale, and the upcoming and the hidden cost of trade.This will make outsourcing to have huge bearing in the economy of the developed countries. The disadvantages of outsourcing as well are more advanced than the advantages that could be obtained from the practise.In situations like this, the people who receive jobs due to outsourcing view it to be beneficial as they would acquire employment. On the contrary however, the countries that outsource the jobs are highly disadvantaged as they will lack employment (Griever 11)
Outsourcing may lead to risk of confidential data to be exposed. For example, in a case where an organization would outsource their HR, recruitment and payroll services, this will highly encourage the risk of exposing the companies confidential to the third party. This step is risky for the organization as there are high chances of losing the control of managerial over the outsourced departments (Sparrow 56).
In any case, the degree of the outsourced partner must be tested for integrity.The risk of loss of data or committing of frauds lowering the reputations or confidence of clients is still very high. The actions of the managerial will be performed by the outside despite the signed contract, which is very risky.Either, the other company are the one who are to provide the contract (Nicholas 109).Outsourcing may lead to synchronizations of the deliverables.If you never chose your right partner to do with outsourcing, some of the areas which would experience problems are like stretched delivery time frames. Any additional duty that pops up when the project is ongoing and was may be not in the contract will cost the outsourcers additional charges.
It won’t be your own department that work for the organization but the outsourcing company who have the interest in the money. Problems will highly be expected in the quality of output.It will be sub-standard and responsibilities will be not be appropriately be categorized. These factors may be very easy to organize within the company but they are very difficult to organize within the outsourced company (Griever 31).
Outsourcing as well may lead to hidden cost and lack of customer focus. Serious threat may be posed with the contract signing across the international boundaries, as there would be need of giving private information to the hired company and the information could be very secretive. The lack of customer focus may arise this because the outsourced vendor may be operating for the need of the expertise for multiple organizations within given period of time. This may lead to lack of focus on the task of the organization by the vendor (Flatworld Solutions). The worst would be that the vendor may not be concerned with the image of the company that outsourced for them and may only motivated with the profit that they will be earning. They will cut down on expenses with an aim of increasing their profits.They may do this by hiring cheap resources or use products of low quality in completion of your task (Sparrow 17).
The digital outsourcing may have some given disadvantages like given countries like China and India may only be given the a quarter of the payment which may result as an disadvantage to the given countries in terms of the labour payment. The first steps that one would make for outsourcing is normally time consume and very tedious, as it will involve several movements for signing of the paper work within the given organizations. This step is very expensive as it involves a lot of expenses. The expenses as a result will make the company to increase their cost for outsourcing which in return makes it expensive since extra cost for professionals will be required for efficiency of the process (Sparrow 34).
Either, outsourcing will make the organization not to be in good position of determining their strength and weaknesses and how they can deal with this activity out. Many companies outsource several activities due to the availability of professional who may not work and give quality product or services as they are expected to.
Though outsourcing has got very many disadvantages and it may totally lead to the failure of the organization. But as well, it has got some advantages that may make the company to achieve their objectives as well as get some good profits. Outsourcing may assist an organization to hire the right hand despite of their geographical locations and the organization probably may acquire the right talent which could be difficult to find within their location (Flatworld Solutions).
Additionally, outsourcing will give the organization an opportunity of enhancing their competitive strategies which would suit globally in the market this may lead to improvement of the products in the market making the cost of production to be low as well. The operation of the firm rapidly will go high and there would be access to the large workforce and the firm would benefit from this as well.
Ching stated that firms may timely deliver on project for the client’s satisfactions. Outsourcing may also allow the firms to free up their limited time and capital funds to make their focus on the main activity of the business. Access to latest technologies may be made by the manufacturing organizations which would make them to advance with the changing trend in the market (Sparrow 8).
The other crucial advantage of outsourcing is that it enables risk sharing between the vendor and the outsourcer as it enables given responsibilities to be moved to the vendor. The vendors most of the cases are normally specialist hence they will fully and adequately plans the procedures and the methods of risk-mitigation factors better. Outsourcing as well enables the company to give out task like highly skilled or executive expertise and may reduce the need of paying some given salaries. Highly repetitive tasks may be outsourced like data entry shipping, accounts and many more. This may in the long run assist as there will be no need of affording an IT full time person hence cut short on the cost of production (Steven 44).
Many organizations believe that outsourcing is of high significance to them as it allows them to achieve their objectives within short period of time and at an affordable price. Hence in the situation of viewing outsourcing to lead to lack of managerial control may not be given that very deep consideration since many companies outsource with the other companies which they understand well and has well have their security details which would enable follow ups upon any failure or miscellaneous behaviours (Flatworld Solutions).
In conclusion,outsourcing is still viewed to be bad as it will lead to exposure of confidential data, loss of managerial control and it will as well lead to hidden cost and lack of focus to the customer, the company may not easily determine their strength and weakness and appropriate way of solving them. As well many professions will be out of the company and work done out of the company. Hence, every organization that intends to participate in outsourcing should do this with much care and should thoroughly evaluate their partners before putting pens on to papers.
Steven, Bragg, M. (2006). A Guide to Correct Business Unit-Negotiating the Contract-Maintaining Control of The Process. Outsourcing. Published by John Wales and Sons. New Jersey, 2006. ISBN-13: 978-0-471-676263.
Nicholas, Burkholder C (2006). The Definitive View, Applications and Implications. Out Sourcing. Published by John Wales and Sons. New Jersey, 2006.
Flatworld Solutions. Advantages and Disadvantages of Outsourcing, 2013. Web. Retrieved from http://www.flatworldsolutions.com/articles/advantages-disadvantages-outsourcing.php
Griever, Maurice F. A Structured Approach to Outsourcing Decision and Initiatives. Strategic Outsourcing. New York: AMACOM, 1999
Sparrow, Elizabeth. Successful IT Outsourcing: From Choosing a Provider to Managing the Project. New York: Springer, 2003