Advantages and disadvantages of outsourcing


25.01.2010 

Advantages and disadvantages of outsourcing

The question about the right proportion between outsourced activities and activities performed within the company is not only a question concerning industrial companies. Today companies in the field of services should consider more profoundly the question which of their activities is vital for the competitive progress of the company and for that reason should be kept within the company resources and which activities may be outsourced.

Crucial issue for the decision which activities should be outsourced is to what extend that will benefit managers by ensuring them more free time and thus allow them to concentrate to their basic responsibilities. Generalized surveys show that typical managers may waste more than four hours a day occupied with problems, arising from marginal operations in the company. It is normal to accept that managers will perform better if they concentrate on the core of their corporate responsibilities and outsource other to the responsibility of expert internal business partners.

HERE ARE SOME OF THE MAJOR ADVANTAGES AND DISADVANTAGES OF OUTSOURCING

Advantages Disadvantages
  • Simplification of business processes
  • Save time
  • Usage of services only when necessary
  • Overcome problems caused by personal turnover
  • Free internal resources for other purposes
  • Decreasing of training and research expenses
  • Replacement of fixed with variable costs
  • Improvement of quality control
  • Increase of cash flow
  • Provide more attention to production value
  • Concentrate on the basic activities of the company and improve company focus
  • Enhance information technologies efficiency usage
  • Gain access to resources that are not available internally
  • Promotion of company image
  • Non usage of available internal resources
  • Risk of unsatisfactory service
  • Risk of loss of control on strategic activities
  • Underestimation of the problem with overhead expenses
  • Unsatisfactory management during the period of transition

HISTORY OF THE DISPUTE ABOUT OUTSOURCING