Business outsourcing is a popular concept in the age of globalization and democratization. But, the liberal theory has drawn many debates owing to its pros and cons.
The low cost and high revenue model of the business outsourcing is a liberalized method to benefit industries from the advancement led by today’s Information Technology. Pros and cons of outsourcing in business are precisely discussed below:-
The Pros of Outsourcing
Higher Economy of Scale:- It cannot be denied that the profit earning is the soul of any business. Management strives for the best production-cost strategy to maximize the return on investment. Outsourcing and offshoring of business operations helps in restricting production-cost to a great extent. The businessman selects the appropriate land (country) and lower cost labor to control capital and other organizational expenditure for business set up.
Better delegation of authority:- Business outsourcing helps company to set up production unit after proper appraisal of the place and its work culture. Selecting the right workforce improves the quality of work and open up avenues for new innovations and speedy workflow. Suppose, if a production or marketing and selling or customer care unit of the company delivers timely, the company finally can fully focus on core competencies like product improvisation and output.
The Cons of Outsourcing
Company’s loss of control over its operations:- Far-off operations often affect the quality of work. The production loses the spontaneity and effective decision making capacity of the company. The business might loss control over the work flow and this could bring sluggishness and shortcoming in the company’s performance. Working on the common goal, or striving towards customer satisfaction becomes tough in this situation.
Communication problems within the line of work:- Indirect communication with a separate and outsourced unit of the company may disturb a line of work owing misinterpretation of information. Again, setting up business in a different nation might crop lingual accent and other communication barriers. This might lead to discontentment in labor unions of the outsourced unit. The situation may upset the business goodwill, goal orientation and profitability of the company.
Finally, it is to be remembered that advantages and disadvantages of outsourcing are two sides of the same coin. Whether to outsource one’s business or not completely depends on the nature, scale and market niche of the business.
Article Source: Articles Engine