In today’s chaotic business environment, corporations are
struggling to handle every single job function in-house. For this reason,
outsourcing has become a common practice in business, and this area has been
What is outsourcing?
Outsourcing is the practice of assigning particular job
functions outside of the business instead of doing them in house.
What are the benefits of outsourcing?
- Improve efficiency and cut down on costs. By outsourcing some of the business job functions to
specialized suppliers, you are allowing more experienced professionals to handle
something for you. This often leads to reduced costs since work processes
are accomplished more efficiently.
- Refocus your time and resources
on your core activities. Often
supporting activities such as back-office takes up a lot of your time,
effort and resources, which in turn might cause you to lose your focus
from your core business activities. By outsourcing supporting processes,
you can then refocus back to your core activities.
- Suitable for dynamic, seasonal demand. It’s not
unusual for many businesses to experience cyclical demand depending on seasonality
or even due to unexpected events. If you are outsourcing, then you have
greater flexibility adjusting the amount of workforce required to get the
job done. At the same time, you are also cutting down unnecessary
What are the risks
Although outsourcing may yield many benefits to your
organization, it still carries some risk. Let’s have look at the most common
hazards so you can protect your organization from any harm:
- Loss of Control. One of the
most frequent risks associated with outsourcing is the loss of control. By
giving out some of your job functions and work processes to a third-party,
you are simultaneously losing some control over the quality and production
timings. To avoid this, it is important that you keep a close eye on the
outsourced activities while also maintaining a close relationship with
- Failure of the outsourcing company to complete your project
successfully and on time. In order to mitigate this risk, you
will need to spend considerable time researching and evaluating your
potential outsourcing options. Make sure that you weigh everything down,
including the company size, previous experience, area of specialization,
case studies if available, and even their social media and website
activity. Remember that you should be basing this cooperation on mutual
trust, credibility, and accountability.
- Hidden costs. Another major risk that is often
seen in outsourcing scenarios is the risk of having hidden costs appearing
outside of your contract obligations. In order to avoid this from
happening, pay attention to your signed contract and have it checked by a
legal consultant. Also, make sure that you define all the project
requirements and that the cost estimate they have provided satisfies every
single requirement on the list.
- Confidentiality. Lastly,
when hiring an outsourcing company it is important that all your information
remains confidential and that intellectual property and personal data are
stored securely and confidentially. Make sure that you are choosing a
partner that ticks all these requirements.