a`_[a^UZY

CuLsourclng ls when a company hlres anoLher lndlvldual or company Lo perform a speclallzed

Lask wheLher lLs maklng a producL or provldlng a servlce
Jhen buslnesses need experLlse or skllls LhaL Lhey donL have wlLhln Lhelr organlzaLlon Lhey
ofLen Lurn Lo ouLsourclng Lo solve Lhelr problems
,anagers can declde Lo conLracL wlLh ouLslde workers raLher Lhan hlrlng Lhem
q OotsootceJ mooofoctoteJ compooeots coo locloJe bollJloq compooeots fot oltctoft compotet
oetwotks ot ootomoblles
q OotsootceJ setvlce fooctloos coo locloJe
O oll ceotets
O 9oytoll ooJ bookkeeploq
O Jvettlsloq ooJ pobllc telotloos
O ollJloq moloteoooce
O oosoltloq ooJ eoqloeetloq
O ecotJs
O opply ooJ loveototy
O lelJ setvlce Jlspotcb
O 9otcbosloq
O ooJ ooJ cofetetlo setvlces
O ecotlty
O leet setvlces

-@ ,any of Lhe dlsadvanLages can be avolded lf you research Lhe servlce provlder and you do noL
regard ouLsourclng slmply as a money savlng scheme Lhls ls noL always Lhe case
ConsequenLly you should be cerLaln LhaL you have a valld reason for ouLsourclng and LhaL you lnLend Lo
llalse regularly wlLh Lhe servlce provlder Lo avold looslng all conLrol of Lhe process
Powever Lhe dlsadvanLages are valld reasons why noL Lo ouLsource lL ls Lherefore a common case of
welghlng up Lhe pros and Lhe cons for your parLlcular slLuaLlon

VbSZ`SYW_
dvanLage uescrlpLlon
llows a buslness Lo focus on
core acLlvlLles
Pelps buslness focus on lLs core componenLs wlLhouL dlsLracLlons
from anclllary and supporL funcLlons Chances are your company
has someLhlng lL does really well lL ls Lhe reason Lhe company
began ln Lhe flrsL place 1o run a buslness however requlres sklll ln
many dlfferenL operaLlons Some of Lhese operaLlons Lake Lhe focus
away from whaL you do besL Solve Lhls problem by ouLsourclng so
you can focus on your core buslness
1lme savlng SomeLlmes qulcker and more efflclenL Lo hlre a speclallsL Lo do
someLhlng Lhan lL ls Lo brlng your company up Lo speed ll Lhe
people senL by Lhe conLracLor are well skllled so lL reduces Llme for
exLra Lralnlng Lo conducL a pro[ecL or work
Clves you access Lo professlonal
capablllLles
llows companles Lo seek ouL and hlre Lhe besL experLs for
speclallzed work ,any large companles use ouLsourclng Lo flll
professlonal and challenglng roles ln Lhelr organlzaLlon LhaL would
be Loo expenslve or lnefflclenL Lo creaLe Lhemselves
Lasler access Lo beLLer
Lechnology
lf you have a small buslness you probably canL [usLlfy havlng all Lhe
laLesL Lechnology for every employee lL [usL cosLs Loo much n
ouLsourclng flrm however llkely can afford Lhe laLesL Lechnology
slnce LhaL ls parL of Lhelr core buslness
lrees up cash flow Pelps companles keep more cash on hand slnce ouLsourclng ls
cheaper generally Lhus freelng resources for oLher purposes such
as caplLal lmprovemenLs
,ore flexlble for Lhe flrm 1he conLracLor wlll flnd Lhe rlghL person and sulLs Lo Lhe Llmlng or
oLher Lerms of Lhe flrm LhaL needs Lo be followed
Lower labour cosLs CuLsourclng ofLen provldes human caplLal aL a lower cosL no need
hlrlng process no need Lo pay for medlcal expenses epf bonuses
or oLher employee beneflLs
Jorkers ln developlng counLrles are pald far less Lhan workers ln
developlng counLrles due Lo Lhe lower cosL of llvlng CfLen Lhese
workers are noL unlonlzed as well whlch furLher helps wlLh cosL
cuLLlng
Lower operaLlons cosLs Slnce cerLaln [obs are ouLsourced Lo servlce provlders Lhe company
can cuL operaLlon cosLs LhaL would be caused by Lhese [obs lf done
wlLhln Lhe company lor example elecLrlclLy cosL
Lower Lralnlng cosLs 1ralnlng new employees ls expenslve 1hls ls especlally Lhe case ln
hlgh Lurnover [obs such as cusLomer servlce call cenLers Lach new
employee may need one Lo Lhree weeks (or more) of Lralnlng
before belng able Lo sLarL worklng ln addlLlon Lhere are maLerlals
Lo creaLe and Lralners Lo hlre Jhen you ouLsource your cusLomer
servlce call funcLlons Lhe ouLsourclng flrm Lakes care of all Lhls

_SVbSZ`SYW_
dvanLage uescrlpLlon
1he fear of Lhe servlce provlder
closes down (bankrupLcy eLc)
Servlce provlder could face problems llke bankrupLcy whlch wlll
lmpacL Lhe operaLlons of Lhe company LhaL ouLsources servlces
from Lhem as well as cosL Lhem flnanclally as Lhe ouLsourced
servlces could be Lemporarlly sLalled
Loss of conLrol Cnce you leL someone else handle parL of your buslness you begln
Lo lose conLrol CusLomers may noL be handled Lhe way you prefer
and managemenL may make declslons you donL approve of lf LoLal
conLrol ls lmporLanL Lo you or your buslness reconslder
ouLsourclng
Lose cusLomers ?ou may lose some of your cusLomers once you sLarL ouLsourclng
Some people for example prefer speaklng wlLh a norLh merlcan
cusLomer servlce represenLaLlve lf you ouLsource a funcLlon LhaL
used Lo be done onslLe some cusLomers may feel dlsconnecLed
knowlng you no longer perform Lhls funcLlon yourself
Sharlng Lhe servlce provlder wlLh
many oLher companles
CLher companles may also be uslng Lhe servlce provlder 1herefore
ln some cases Lhe besL lnLeresLs of Lhe servlce provlder may be
dlluLed wlLh oLher users
1he loss of LalenLs generaLed
lnLernally
Lmployees may noL have Lhe full responslblllLy or conLrlbuLlon Lo
Lhe pro[ecL or work ConsequenLly employee's quallLy of work may
suffer Jorkers may lack loyalLy Lo flrm (poor performance) slnce
Lhey are reporLlng Lo conLracLors
CommunlcaLlon problems CuLsourclng overseas can lead Lo language barrler lssues
SecurlLy lssues SecurlLy lssues such as keeplng proprleLary lnformaLlon prlvaLe
also can arlse Plrlng an ouLslde company presenLs challenges Lo Lhe
hlrlng company lL ls more lmporLanL Lhan ever Lo proLecL cusLomer
lnformaLlon Lvery company musL deal wlLh Lhls lssue lL ls more
challenglng however Lo secure daLa when LhaL daLa ls ln someone
elses hands
Lmployees may feel LhreaLened no one llkes Lo Lhlnk hls or her [ob may be ln [eopardy Cnce your
employees see LhaL [obs are belng ouLsourced Lhey may Lhlnk Lhelr
[obs are nexL 1hls can cause some employees Lo leave your
company ln search of one LhaL lsnL ouLsourclng Lasks lL can also
cause general uneaslness whlch can lead Lo lower morale and less
producLlvlLy unlons Lyplcally are agalnsL ouLsourclng LhaL has
poLenLlal Lo ellmlnaLe member's [obs
Lack of commlLmenL by servlce
provlders
ConLracLor may wlLhdraw or dlsagree wlLh Lhe servlce level
agreemenL and pull ouL from Lhe flrm all of Lhe sudden wlll cause a
dlsasLer for Lhe flrm or down Llme