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Outsourcing Advantages and Disadvantages Businesses Should Know

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In this time where almost everything is accessible, especially with the power of the internet, including business solutions, most businesses opt to outsource some of their business functions instead of hiring in-house staff. If you’re considering offshoring, here are some outsourcing advantages and disadvantages you need to know before giving it a shot. Without a doubt, outsourcing offers an effective scheme to companies today, more so for those trying to streamline their services while hoping to spend less on labor costs. However, just like other things, outsourcing is like a two-sided coin, perks and drawbacks and all. Thus, it’s important to consider these factors to determine if it’s a smart choice to transfer some of your business activities offshore.

Advantages and Disadvantages of Outsourcing

It’s now easier to get things done with the help of different online platforms, marketplaces, and third-party vendors. Hence, many business owners leverage outsourcing to propel their businesses to greater heights. Nevertheless, there are still those who are hesitant about the effectiveness of outsourcing.

Top 5 Advantages of Outsourcing

Are you still undecided about whether to try offshore outsourcing? While there are people who don’t prefer this business approach, others admit the benefits of hiring third-party partners outweigh its flaws. To paint you a picture, here are some outsourcing advantages and disadvantages.

1. Cost Reduction

You don’t have to doubt that offshore outsourcing cuts your costs. This is the most influential factor why firms farm out their non-core tasks to outsourcing companies. With this business practice easing costs, businesses will save much money.

You don’t have to advertise for vacancies, spend hours on interviews, or even coordinate with manpower agencies. You have reduced your effort in setting up and maintaining workspaces and facilities. You will spend less on holidays and bonuses.

2. Promptness and Expertise

When you outsource, you hire experts in their field. With this, you gain access to a greater level of global skills, something your big rivals enjoy. With a pro handling your project, your in-house staff can get to work right away (without worrying about about training, tools, or resources), and you’ll get quality output.

3. Time Zone Advantage

This is another benefit to pushing businesses to hire offshore staff. Outsourcing to a country that has a huge time difference allows you the benefit of round-the-clock services. It prevents you from missing leads because they’re available all year round.

4. Staffing Flexibility

Businesses with seasonal demands need not think of the burden of hiring temporary workers. Ask your outsourcing partner for added labor only when needed.

5. Economy Booster

Outsourcing adds to the economic growth of a country. In fact, it opens opportunities for many job seekers, freelance workers, and even full-time employees. In the same way, it allows access to specialized skills and modern technology needed by firms.

Related Post: 5 Reasons Businesses Continue Hiring BPOs Despite COVID-19

professionals working in outsourcing firms in Asia

Top 5 Disadvantages of Outsourcing

On the other hand, here are a few outsourcing disadvantages businesses need to guard themselves from.

1. Reduced Management Control

The biggest worry you can have when you outsource your business tasks is losing full control of those same functions. This is due to the fact that you are entrusting a portion of your business to someone else’s accountability.

2. Service of Poor Quality

An outsourcing firm can’t be sure to give you a perfect output or meet your expectations. In such a case, the business’ reputation may suffer, resulting in a loss of clients, sales, and profit. That’s why, before hiring third-party vendors, you need to make sure they’re the best fit for your business needs.

3. Exposure to Risk

Security issues are threats that outsourcing can bring to either or both contracting parties. In fact, confidential details, sensitive data, and intellectual property may threaten the deal because unforeseen factors can expose them to risk. Nonetheless, BPO and KPO firms regularly ensure clients the utmost confidentiality of their data.

4. Communication Problems

Other problems you may have when you outsource to a third-party service firm are mismatched time zones, language barriers, and cultural differences. These small yet crucial factors often affect the practice because poor communication results in poor quality of output.

5. Job Opportunity Loss in Home Countries

Since outsourcing involves sending work overseas, it can mean the loss of jobs in the client’s home country. In turn, this propels—if not dampens—the growth in unemployment.

outsourcing business functions

Outsourcing Advantages and Disadvantages: Philippines vs. India

By now, you must have noticed how smart a business move outsourcing is. With the economy’s status nowadays, outsourcing is the best way to run your business. The disadvantages mentioned only occur when you choose the wrong partner. That said; when you hire offshore staff, you need to choose one that has a good record of accomplishment and one that you can trust over the years.

The two leading countries when it comes to outsourcing are the Philippines and India. Not only do they have the manpower that is equipped and skilled; they also have the technology to support and deliver business solutions.

Are you planning to offshore some of your business functions but still don’t know where to outsource them? We made a comparison between the 2 pillars of outsourcing in Asia.

Language Proficiency

Philippines

India

Workforce

Philippines

India

Quality Service

Philippines

  • Excellent in providing customer support, digital marketing, accounting, market and legal research, web design, content creation, and software development

India

  • Known for IT infrastructure and its offering of the latest technology, ISP, analytics, cyber security, app and software development, and even cellular networks

Culture

Philippines

  • Multicultural
  • Has been greatly influenced by the Western culture

India

  • Unique Indian culture that might cause cultural barrier
  • Has been greatly influenced by British culture owing to its history

Related Post: Outsourcing Definition and Everything You Need to Know About It

Outsourcing Advantages and Disadvantages: Choosing the Best Outsourcing Partner

Outsourcing advantages and disadvantages are there to help you weigh whether offshoring is best for your business. Moreover, before hiring one, make sure to check out these factors. Regardless of what offshore company from whichever country you eventually consider hiring, there will always be outsourcing advantages and disadvantages. It’s a matter of whether it benefits you more than its red flags.

If you’re considering leveraging this business solution, make sure to rely on trusted outsourcing firms. Speaking of which, offshoring from the Philippines allows you to grow your business without spending too much. With that being said, we’d love to help you achieve your goals with our competent professionals and high-quality outsourcing services. Partner with us today!