OUTSOURCING: THE ADVANTAGES… AND THE DISADVANTAGES

Posted by Sheraz Ahmad on May 26th, 2021

Faced with an increasingly complex market, business leaders have found an ingenious solution in outsourcing. Outsourcing has its advantages, but also its disadvantages. Let's find out about them in this article.

What is outsourcing?

Outsourcing is a concept aimed at entrusting a service provider with the management of the functions, services or activities of a company. One of the reasons for outsourcing is to improve the quality of service, increase production or reduce costs.

Outsourcing can be done nearshore or offshore. Outsourcing in nearshore consists in collaborating with local service providers, on the national territory or in neighboring countries. We talk about nearshore for example if a French company outsource its functions to a company established in Italy, Romania or Morocco.

The offshoring is by cons to relocate to faraway places like Africa, the Indian Ocean and Asia.

The advantages of outsourcing

The first advantage of outsourcing is the gain in performance. Yield and turnover can increase considerably. The cost of labor is also optimized, or even reduced (economy of scale).

Outsourcing also allows a better focus on the core business and innovations. Indeed, low value-added activities are delegated and the outsourcing company can capitalize its resources in more strategic and high-yield functions.

Visit also: Outsource Accounting services in Canada

The disadvantages of outsourcing

The outsourcing is not without risks. The company can lose control of its production process by delegating part of its functions to a service provider. It can also be confronted with problems of production quality and respect of delivery deadlines.

In the event of problems, a difference in crisis management can also be different. For offshore outsourcing, especially in underdeveloped countries, gaps in technological means can put companies that outsource at a disadvantage.

The level of qualification of the personnel of the companies taking charge of the outsourced missions is also a factor to be considered. He may not have the skills [and know-how] necessary to carry out the missions and thus guarantee a better quality of service.

The impacts of outsourcing

The effects of outsourcing on a business depend on several factors. In general, everything is based on the strategy of the company that is outsourcing. A business can certainly expect an increase in its turnover with outsourcing. A gain in competitive advantage therefore. It can also hope to improve the quality of its services, but on condition of finding the best provider.

For details, please visit: finexoutsourcing.com/canada/