Pros and Cons of Outsourcing

Pros and Cons of Outsourcing (Benchmark Assignment)

Advantages

Cost savings

Businesses can be able to achieve significant cost savings when a function is outsourced. Office space expenses, employee compensation costs, and other costs that are related to providing a manufacturing setup or workspace are easily eliminated and free up other resources that can be used for other purposes.

Focus on Core Business

Outsourcing enables organizations to focus on core business and their expertise. If an organization goes outside its expertise, it tends to get into business processes and functions with the chances of them not being that knowledgeable and could derail them from their main focus.

Improved Quality

Organization quality can be achieved through the use of vendors who have more specialized processes and expertise (Greaver, 2009).

Customer Satisfaction

The good thing with having a vendor contract is that they are tied to certain quality and service levels.

Operational Efficiency

Outsourcing offers a business exposure to the best possible vendor specialized systems. Specialization offers more efficiency that ensures higher quality levels and a quicker turnaround time.

 

 

Disadvantages of Outsourcing

Quality Risk

Outsourcing is likely to expose a business to potential risks as well as legal exposure

Quality Service

Unless a contract particularly identifies a process that will be able to measure the quality of his work, the chances are that the organization may experience poor quality services. Some contracts are made and intentionally not included with the service levels and quality

Language Barriers

If the organization call center has been outsourcing to a nation that uses a different language, the chances are that there may be dissatisfaction levels for customers who deal with the language barriers of some clients having a strong accent.

Public/Employee Opinion

There may be negative perceptions with the move to outsource and the sympathy of the jobs that will be lost during the process. Such a situation has to be managed with grace and sensitivity

Organizational Knowledge

An employee who has been outsourced is likely to lack the same passion and understanding of the business as compared to a regular employee. There are high chances that an employee who has been outsourcing will interact with the organization clients and not be vast with the organization, and this can lead to a customer experience that is negative.

Labor Issues

Organization labor in many countries such as the United States tends to have very strong feelings with regards to outsourcing in other nations that have worse working conditions and less living standards. This position is likely to affect the way the workforce will respond to the outsourcing process and may affect their day to day productivity.

Security and Legal Compliance

It is important for any organization that issues related to security and legal compliance be addressed using legal documentation. Processes that have been outsourcing have to be managed so as to make sure that there is diligence with system security and legal compliance.

Employee Layoffs

Outsourcing in most cases leads to the cut down on the staffing levels. Unless the process is planned by attrition, layoffs will be inevitable (Grauman, July 2000). This is a major challenge and it the organization does not handle it properly, it is likely to impact negatively the employees that remain in the organization as they will be working with fear that they can be easily replaced or laid off.

Recommendations

I came up with the above mentioned advantage and disadvantages of outsourcing after conducting a literature review of several studies and literature on the same with the intention of coming up with the best possible recommendation so as to advise the director on whether or not to consider outsourcing for the organization technical support services with the increasing IT technical support costs.

When the manager is looking for vendors to outsource, he has to make sure that he takes his time to think through the specific needs of the organizations with the best interest of the organization given priority at have not less than three requests for proposals to make sure that the organization gets the best value possible.

Successful outsourcing calls for a strong understanding of the capabilities of the organization as well as the future direction. Management decisions with regards to the significant functions of outsourcing are considered as being among the most strategic that an organization can make, now that they basic choice of an organization of the functions that internal expertise is nurtured and developed and those that such expertise tend to be purchased.

There are some of the basic decisions that relate to the design of the organization. The outsourcing process that has been solely based on a comparison of costs is likely to make organizations miss out on opportunities to have the knowledge that can lead them to the development of new technologies and new products.

From the review, it is evident that outsourcing in major IT functions like the one facing the organization has been on the increase. And this growth of both breadth and death indicate that its worth for any management to consider outsourcing, but this has to be under the right circumstances as it may offer the advantages that have been noted by its proponents (Foxman, 2004).

 

 

 

 

 

 

 

 

 

References

Foxman, N., (2004). “Succeeding in Outsourcing.” Information Systems Management. Winter

Grauman, K., ( July 2000). “The Benefits of Outsourcing.” CPA Journal. 

Greaver, F., (2009). Strategic Outsourcing: A Structured Approach to Outsourcing Decisions and Initiatives. AMACOM

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