Pros Cons Of Outsourcing
Must Be Taken Into Account

Before considering the pros cons of outsourcing, some companies mistakenly dive right into outsourcing. So they don't know if it's really a good fit for them. It's important to do your homework first.

Here are some of the top reasons motivating companies to consider an IT outsourcing project.

• Cheaper Labor, especially if you are looking to offshore outsourcing. One of the reasons these people are paid less is because their standard and cost of living is much lower than in well developed countries.
• Lower Operating Costs, because these are employees who are not physically in your offices, taking up space, consuming electricity and needing computers with software, etc.
• Lower Training Costs, because the outsourcer has taken care of this and you are contracting for their expertise so there is not time "lost" in training.
• Access to Better Technology, because it is often less expensive to partner with someone who already has the latest technology installed than for you to incur the costs of buying and implementing that same technology.
• Access to Professional Expertise and Quality Services, providing you have developed an excellent business plan and selected the right outsourcer.
• Increased Productivity, means you can provide customer service 24/7 at a lower cost than if you hired this staff directly into your organization. A big competitive advantage.
• Focus on Core Business, means outsource your non-core activities so your people can focus on the core elements of your business that you do really well.
• Streamline your Business Operations, and increase control of your business.
• Outsource Non-Core Activities, means you can experience increased efficiency and productivity in these non-core activities.
• Manage Change, outsourcing makes you more flexible to manage changes in your business and to take on more business. You are better equipped to handle the challenges of your customers.
• Free Up Cash Flow, and reduce capital expenditures.

Rather than call this next list the downside of pros cons of outsourcing, let's say they're better identified as the issues you need to watch out for and make sure they don't sabotage your outsourcing efforts.

• Employees Feel Threatened, which leads to lower moral, less productivity and in some cases people leaving. It is extremely important in your communications that you minimize this event. It can cause major problems in the start up of your IT outsourcing project.
• Potential Loss of Control, as outsourcers may not be communicating with your customers the way they were used to when dealing directly with your staff. One more reason why communications is a huge part of setting up the outsourcing project correctly.
• Potential Loss of Customers, some customers prefer speaking with their North American representative and do not like dealing with offshore support people.
• Security Issues, your valuable data is now in someone else's hands. Make sure it is secure and that you are still very much in control. Especially true for HR, accounting and tax preparation functions.
• Quality of Work, be careful here "you get what you pay for". Sometimes businesses think they are doing the right thing when they attempt to lower the outsourcing costs and go too far. The outsourcer then does not provide the best staff. Remember, you are not the only customer of that outsourcer.
• Study Outsourcing Projects Carefully, it may be more advantageous to revamp a business process than outsource it.
• How Solid is your Outsourcer? Should they go bankrupt or out of business, you may immediately have to move that service back in-house of find another outsourcer quickly.

A number of these pros cons of outsourcing points are covered in more detail in the writing of the IT outsourcing business plan and also in the best practices in outsourcing pages within this site.

Fortunately in this list of pros cons of outsourcing the advantages outweigh the list of disadvantages. You may well never experience any of these disadvantages provided you do your homework, set up the best outsourcing business plan and partner with the right outsourcer.

Before outsourcing, evaluate the pros cons of outsourcing and take into consideration the interest of your customers and employees. Then make that informed decision.

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