The Pros and Cons of Outsourcing for Business

September 20, 202112:15 pm2898 views
The Pros and Cons of Outsourcing for Business
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Understaffing can harm a business, especially during growth and expansion. When your organization is growing and evolving, you may consider adding headcount to keep up with business demands. However, hiring new employees often comes lengthy and costly. If you want to get the best talents without dealing with all the hassle, then outsourcing can be a great alternative. Outsourcing allows companies to keep costs low while having access to competent employees, ensuring productivity in the business operation. To make the most of it, here is a guide on the pros and cons of outsourcing for business.

Jobs You Can Outsource

First of all, understand that not all jobs can be outsourced. There are jobs with a high level of confidentiality that may be risky if being handled by outsiders. On the other hand, there are jobs that will be easier to run by outsourced employees. Here are several jobs you can outsource.

1 . Market Researcher

Market researcher is one of the jobs that are relatively safe to outsource. Doing research is typically time-consuming and tedious. If a company has to invest time and energy in market research, it may be unable to focus on running its business. Outsourced employees can conduct basic research for your company, such as identifying new consumers, locating networking events to attend, or obtaining market statistics.

2 . PR and Content Strategist

When your company has so much on its plate to handle internal business operations, external relations can sometimes be neglected. To ensure the company’s Public Relations (PR) and Content are taken care of, it is beneficial to hire outsourced employees for this division. This can cover a wide range of positions, starting from PR staff, graphic designer, content writer, SEO strategist, social media manager, and many more. Since this division focuses more on the communication and creativity side, its low confidentiality makes it safe for outsourcing.

3 . Customer Service

Customer service has long been associated with outsourcing. As a company expands, it needs more customer service representatives to engage with customers and address their issues. Such recurring growth entails additional operating costs if it is an in-house team. When you outsource your customer service staff to a third-party talent company, you may enhance client satisfaction without spending a large cost.

Read Also: Outsource HR Functions Can Boost Productivity

Main Pros of Outsourcing

As you may have learned from previous points, the benefit of outsourcing is to increase effectiveness, both in terms of time and cost, compared to doing in-house hiring for permanent employees. 

1 . Lower Expense for Long Term Benefits

If your company decides to hire in-house or permanent employees, HR managers need to have a thorough preparation in ensuring compliance with law and regulations. The financial preparation can include budgeting for long-term benefits, such as social security, health insurance, and a holiday bonus. It is obvious that the process of in-house hiring can be lengthy, starting from posting job vacancies, screening resumes, conducting background tests, medical checkups, and so on. If you opt for outsourcing employees, these expenses can be lowered. Since outsourced employees will only work for a certain period of time, there will be no need to pay for social security and long-term health insurance.

2 . Retaining Employees Who Are on Their Leave

Another benefit of outsourcing is that you can get outsourced employees to back up the job of in-house employees who are on leave. If your company has a sabbatical leave policy, you may be wary of the vacant position, yet not wanting to hire permanent employees, as the vacancy is only temporary. Outsourced employees can be a solution to fill this vacant position, as they will only be working for a certain period of time. More than to ensure that your business operation can still run well, having outsourced employees to backup a certain job can increase the retention of employees who are on their temporary leave. 

Main Cons of Outsourcing

Aside from its benefits, outsourcing also comes with some drawbacks. Not having to provide full benefits to outsourced employees means being ready to not receive results like what in-house employees deliver. Here are two main drawbacks of outsourcing.

1. Issues with Communication 

Although outsourced employees may work full-time office hours within a certain contact period, you may still have issues with their commitment. Outsourced employees’ priority is to get the job done, which may put aside sharing similar values with your company. This can obviously be seen in terms of communication. If your in-house employees may not have any problem with being contacted for urgent matters all of a sudden, your outsourced employees may. You may have to be okay with them not behaving as warm and communicative as in-house employees. You may also need to adjust the communication clarity, as they may not be familiar with how you communicate in your company. 

2. Risking Company’s Privacy

If your company runs a business of highly confidential matters, you may need to reconsider outsourcing. While outsourced employees can be subjects of a Non-Disclosure Agreement (NDA) that regulates confidentiality, having them may expose risking your company’s privacy. This can be in the form of many things, such as intellectual property, unfinished patents, business ideas, and many more. However, if you are sure your company can prevent this risk, then you can proceed to hire outsourced employees.

Being informed about outsourcing, including the pros and cons, may not be enough to proceed to do it right away. The key to ensure that the outsourcing process goes well is making sure that this approach is agreed upon by all stakeholders. Discuss this matter with the top-level management and the CEO to see if outsourcing can be beneficial for your business operation. Only when an agreement is reached can you proceed to the next step of choosing a talent outsourcing agency. Outsourcing may not be suitable for all companies, so if your company may not opt for this, there are still other alternatives to still ensure that the business operation goes well.

Read Also: 3 Roles Startup Leaders Should Outsource

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