Benefits and Shortcomings of Outsourcing
The popularity of the term outsourcing has increased in America. Outsourcing is not limited to manufacturing since it is possible to get customer support from people in other states. However, outsourcing being popular does not make it be the best always. Outsourcing has its good and bad sides as the article below explains.
Outsourcing is advantageous because labor costs go down. Among the core factors that determine the price at which a commodity is sold is the cost of labor. Companies set prices of products in line with the much they spend on their people. America has a higher cost of living, making factories to spend a lot in wages. However, the cost of living in China and India, meaning employees can receive lower wages and be in a position to cater for their expenses. This lowers the cost of manufacturing hence able to offer, allowing them to offer products at a competitive price.
It is helpful to outsource because it avails more hours. While the weekly working hours of Americans is 40, technical issues do not care about time. In case a company is interested in providing customer support in-house; staffs have to be in offices the whole day all week. Employees working at midnight might develop issues like irritability, insomnia, difficulty with personal relationships, insufficient sleep, lack of energy, and difficulty in concentrating. For India, American midnight will be day time and it will not be a big deal for people responding to customer service at India. In fact, some IT providers outsource to numerous time zones to add the time services are available.
It is disadvantageous to subcontract because you are not able to control quality. When your company does everything in-house, you can perform the quality check by walking around. Outsourcing from a different country makes it hard to control quality. Therefore, issues can repeat themselves many weeks only to come to your notice when clients complain or you board an overseas flight to look at what is going on.
It is not advisable to outsource as this lowers employee morale. Company morale is at stake when workers feel they are not secure with their jobs. When you begin to outsource various services overseas, the other staffs start to feel insecure. They tense and start looking for greener pastures.
Outsourcing has shortcomings due to cultural barriers. Value systems differ slightly in different parts of the world and what is acceptable in a region may be a taboo to another. In case your cultural values and those of the business you outsource differ, business priorities will be different and problems are likely to occur. Language barrier also creates frustrations among customers and service providers.