How Does Outsourcing Impact Organizations?

Before we address the effects of outsourcing on companies, let us first define what the practice of outsourcing actually entails:  allotting certain job functions to an outside organization, instead of having them performed by an in-house department or employee.

Studies have shown that in 2013, over two million jobs were outsourced.  Many of these jobs were given to workers in India and China.  Of that total, 43 percent were IT jobs, 38 percent were research and development jobs, 26 percent were distribution, and 12 percent were call center jobs. By 2014, outsourced IT jobs increased to 60 percent.

Outsourcing has been adopted by several organizations – private and public, across the globe. While there are drawbacks to outsourcing jobs offshore, many business owners have discovered outsourcing to be beneficial to their organizations.  Here, we will explore both the advantages and disadvantages.

What are the benefits of outsourcing?

1.  The ability to hire the right talent for the job

Since business owners are not limited by geographical location, they have the opportunity to search workers from all over the world in order to hire the right talent for a job.   This is particularly true for jobs that may require a rare skill which may be difficult to find among current in-house employees, or even people within the same country.

2.  Outsourcing reduces operational and recruitment costs

Even if there is a need for businesses to hire additional workers, there is no need to expand the current office space if you will outsource jobs. Additionally, hiring workers from other countries where the cost of living is lower, usually means paying lower wages.

3. Outsourcing allows organizations to concentrate on core business issues

By outsourcing jobs such as data entry, telemarketing and payroll, business owners are able to focus on more important activities such as sales and marketing.

4.  It provides flexibility to companies that have varying demands

Several organizations have varying demands, depending on the season. For example, there is usually a need to hire more employees during Christmas season, especially for marketing and sales. During tax season, businesses need to hire extra accountants. When you outsource jobs, you don’t have to hire long-term employees.

What are the disadvantages of Outsourcing?

1.   Work quality is not guaranteed

When you agree to have an outsourcing company acquire jobs for your business, you sign a contract which essentially turns your management control over to that company. The outsourcing company may not have the same quality standards, work ethic, or drive that you and your in-house employees have within your own company.

2.  The loss of confidentiality

Outsourcing jobs means business owners frequently find themselves having to forego a portion of their privacy. There may be a need to entrust confidential information such as login details and client information.

3.  The inability to monitor your workers regularly

Since workers are in different parts of the world, it can be difficult to monitor their activities. This is particularly true for workers in different time zones.

4.  The impact on employee morale

When companies outsource jobs, existing in-house employees may feel that their jobs are also at risk and may eventually be eliminated. This interpretation could eventually lead to decreased company loyalty.

In Closing

As a business leader, if you decide to outsource jobs within your organization, you need to consider forming an operative partnership with the outsourcing company.  This will help you successfully meet your requirements within the necessary and appropriate perimeters for your organization.  Be sure to perform due diligence on the company to avoid losses. At the same time, make sure that in-house employees have a clear understanding as to why there is a need to outsource other jobs, and that this development is of no threat to their own.

 by, Fred Coon, CEO

Take your job search and LinkedIn profile to new levels and achieve your career goals with LinkedInSecrets.us. Leveraging LinkedIn for Job Search Success 2015 will transform how you use LinkedIn on a daily basis and create a profile that will WOW recruiters and hiring managers.