Pros and Cons of Outsourcing
The term outsourcing has widely spread in America. Outsourcing is not for use in manufacturing only because it is possible to connect with a person in another nation on customer care line. However, being popular is not an indicator of outsourcing being an all-time option. Outsourcing has its cons and pros as explained in this article.
Outsourcing is helpful since it helps one to cut labor costs. Among the most important determinants of the price of a commodity is the labor cost. Prices at which companies do offer their products are determined by the much its labor costs. 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 makes the cost at which factories manufacture to be low, enabling them to sell their products at prices that are competitive.
It is good to outsource because it creates more hours. 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. Employees working at midnight might develop issues like irritability, insomnia, difficulty with personal relationships, insufficient sleep, lack of energy, and difficulty in concentrating. 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.
When you outsource, you are disadvantaged since you have 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.
It is disadvantageous to outsource because it lowers staff morale. When staffs feel insecure in their jobs, company morale is ruined. When you decide to outsource different services overboard, the remaining staffs begin feeling insecure. The staffs tense and embark on the search for better jobs.
Outsourcing is disadvantaged by cultural barriers. Different parts of the world have value systems that differ and what a region accepts may be unacceptable in a different region. If the outsourced company does not have the same cultural values as your business, they may have different business priorities hence causing problems. Also, language barrier brings about frustrations among service providers and customers.