Outsourcing Pros and Cons

You're intrigued by the idea of outsourcing business processes and systems to free up your company’s time, cut back on costs, and potentially scale your business. But you'd like a fresh, objective assessment of the cost and benefits.

First, let’s talk through the “pros.”

First and foremost, outsourcing strategically can slash your costs. Domestic talent in United States just costs more, for many reasons. Not all jobs can be outsourced, obviously. But you can offshore entry-level jobs, like data entry, transcription, and translation, to competent providers and teams around the globe. Another big “pro” is that outsourcing allows you to work on a more liberal schedule and frees you up from obligations to employees, such as paying for holidays, buying workers' compensation insurance, managing people in-house, etc. The proliferation of easy to use, web-based resources and fast data channels means you can communicate with your outsourcing teams in real time. Even though these companies are HQ'd internationally, they can participate in real time decision-making and project management. Outsourced projects are also scalable in a way that traditional in-house projects are not. For instance, if you've got a big project on the docket, you can scale up. If you need to trim costs when projects lie fallow, you can scale down. Capacity is much more flexible.

The cons, however, are important to address.

First of all, you may butt up against cultural differences. This might not matter, when you're doing something relatively simple, like data entry. But if you're trying to manage projects or organize internal telecommunications, the lack of cultural familiarity can be an obstacle. You also need to protect intellectual property and privacy -- not just regarding your data but also regarding your customers' data. You also face security concerns. Will your data – or your clients' data – wind up in the wrong hands or be used to perpetrate fraud or other crimes? Any time you let an outside entity into your business processes, you must be mindful of these concerns. Lastly, you could encounter process problems. For instance, the outsourcing team might have a hard time understanding, mapping, and following your processes – or amending them to meet your needs. Alternatively, the company may de-prioritize your projects, especially if you only give them business in a haphazard manner. When you really need services, the team might not be available, or they may only have a skeleton crew available to handle your account. The bottom line is this: you need to do an internal company assessment to validate which types of processes might be best outsourced. Start slow and start small. Build trust. Then, once you've found a team that really understands of your business, scale up, systematically.