Advantages and Disadvantages of Outsourcing
The term outsourcing has increased in popularity in America. Outsourcing is not limited to manufacturing since it is possible to get customer support from people in other states. However, popularity does not mean you should always go for outsourcing. There are benefits and disadvantages of outsourcing.
Outsourcing is advantageous because labor costs go down. Among the core factors that determine the price at which a commodity is sold is the cost of labor. Companies set prices of products in line with the much they spend on their people. America has a higher cost of living, making factories to spend a lot in wages. However, the cost of living is lower India and China, meaning staffs can be paid lower wages and meet their needs. This lowers the cost of manufacturing hence able to offer, allowing them to offer products at a competitive price.
It is advisable that you outsource because more hours are created. While there are 40 working hours a week for the Americans, time is not a concern when technical issues are concerned. In case a company is interested in providing customer support in-house; staffs have to be in offices the whole day all week. Staffs in the office at 0000h may experience issues like insomnia, insufficient sleep, difficulty in concentrating, lack of energy, irritability, and difficulty with personal relationships. For India, American midnight will be day time and it will not be a big deal for people responding to customer service at India. In fact, a number of IT providers outsource to each time zone to increase the time they provide services.
Outsourcing is disadvantaged in that there is less quality control. When a company perform everything in-house; it is possible for owners to do a quality check by walking around. When you outsource from another company, you will not find it hard to control quality. Therefore, issues can repeat themselves many weeks only to come to your notice when clients complain or you board an overseas flight to look at what is going on.
Outsourcing is disadvantageous in that is lowers the morale of employees. Company morale is at stake when workers feel they are not secure with their jobs. When you begin to outsource various services overseas, the other staffs start to feel insecure. They tense and begin to search for greener pastures.
Outsourcing is disadvantaged by cultural barriers. Value systems differ slightly in different parts of the world and what is acceptable in a region may be a taboo to another. In case you outsource a company whose cultural values vary from your companys, they will have business priorities that differ, thus causing chaos. Language barrier also creates frustrations among customers and service providers.