Many employers reach this cross road at certain times in their production life. When talents are needed in a company or a new production line or service is introduced. It is vital for employers to sit back and ask themselves the best way to save cost while bringing out the best products or services.

One of the main things employers tend to look at is, staffing. To be able to address this issue effectively, they ask the following questions and hope answers to them will afford them more closure. These questions are as follows:

What sort of talent will we need for this product/service? Do we have adequate facility to house the required staff? Do we have  enough resources to handle the payroll for the required talents? Do we already have the needed talent in-house to be able to accomplish the needed tasks? Where can this talent be found? What is the cost of attracting them to us? Are we better off outsourcing the department, sector or services?

For the purpose of this discuss, we will be looking at the advantages and disadvantages of outsourcing. This is aimed at helping employers weigh their options, depending on the type of product or services they offer. That way they can make better, informed decision when it comes to outsourcing or employing in-house.

What Is Outsourcing?

Outsourcing is a business strategy that moves some of an organisation’s functions, processes, activities and decision responsibility from within an organisation to outside provides.

To make this easy to understand i am going to exemplify this: You are an online wholesaler of cloths and have customers buying products from all over the country. From the start it was easy for you and two of your staff to handle the volume of phone calls that come from these customers. As business improved and the calls was now getting in the way of your operation, you needed to employ three more employees to handle those queries. The issues is that you do not have the space to house them. Because of this issue, you decided to ring up Top100 an outsourcing company to help you with three customer service staffs who will be handling all your calls. Because they are sourced and housed by their company, all your problem will be solved by that move. That strategy is called outsourcing.

Advantages Of Outsourcing

Please note that the following advantages will depend hugely on the outsourcing company you have chosen  and the nature of your services. These are a few of the advantages:-

Cost Effective

The cost of recruitment is very high, more so for big companies. This cost can greatly be reduced when its done by HR professionals associated with smaller outsourcing companies. Imagine how much it would cost for companies like IBM to recruit a staff, but if done by an outsourcing company, that cost is hugely reduced. Most outsourcing companies will trash out deals that will see you pay cheaper than in-house staffs. There is also the cost gained from not housing staff, not handling complaints, not arranging payrolls and holiday pay etc. This might be by far the best among the list of why people choose outsourcing over in-house.

More Focus on Core Business

Companies always choose to outsource areas of the business that are not their core areas, examples are HR, Administration and customer services. Because these sectors are outsourced, it allows the company to give more focus to the core areas of the business and maximise profit.

Improved Quality

Because the company has now focus on their core business area, quality is greatly improved. Occasional reports from the outsourced company on customer complain and satisfaction also helps the company in product review and hence lead to improved quality.

Better Customer Satisfaction

Just as there has been more focus in the core areas of the business, the outsourced company gives better focus to the customer needs. They make sure customers are treated as individuals. In turn customers come to realise that they are valued and this leads to better customer satisfaction.

Operational Efficiency

It is a proven fact that when companies focus on their core services or product, they become more efficient on those sectors. Outsourcing helps reduce the amount of sectors and tasks needed by a company to complete the consumer satisfaction circle. If the outsourced company stays on top of the sector they handle, then the whole company can easily work like a well oiled machine.

Disadvantages Of Outsourcing

Let us underline that these disadvantages will depend hugely on the outsourced company, the product/service type and location of the outsourced company. It has to be mentioned that it is not advised to outsource core areas of the business. Proper research will need to be made before outsourcing, to make sure that the outsourced company understand your company culture and values and are willing and able to uphold them.

Risk Of Losing Quality

This is more likely to occur when the core area of a business have been outsourced. Sad but true, that some companies take up orders that they do not have the tools or man power to execute. This leads to companies outsourcing key areas of their production and services. If the outsourced company is not well vetted, there might be huge risks to the quality expected from the company. There is great need to make sure that the right sector is outsourced to the right company so that quality is maintained.

Language Barrier

Most outsourcing companies operate there businesses in a different geographical area from their client. This could mean that the customers they serve might speak a different language from their staff. This can be an issue if the right staff with the right language and intonation skills, are not hired to perform these tasks.

Legal compliance

There is always a risk that the outsourced company might not understand all the legalities involved with a certain product or service. This can be mitigated by submitting a full dossier to them and stating all of these. Also make sure that learning and development classes are organised for their staff to keep in tab with changing laws.

Security

With the flow of information from the Parent company to the outsourced company and vice versa. There are chances of security bridges or data mismanagement during these transfers. As said, with proper vetting you will be able to get an outsourcing company that holds confidentiality at a very high esteem.

Employee Layoff

When companies outsource roles, sectors or an entire department, there are chances that some people in the company might have to loose their jobs. A good strategic planning helps navigate thru this negative factor.

Employ Or Outsource?

Imagine paying less for the same service, while still getting better results. This is exactly what you get from a good outsourcing plan. If combined with a good strategic plan, outsourcing is the future of business. Always make sure you put into consideration what exactly needs to be outsourced and what the company needs to focus on.

Not all aspects of the business should be outsourced if productivity and quality are to be maintained. So back to our question, should you outsource or employ? Consider the pros and cons, consider your type of business, evaluate what aspects of the business will be outsourced and make sure quality is not sacrificed.