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Disadvantages of Outsourcing

When a company has another outside business handle some services, this is called “outsourcing.” Services that can be outsourced include payroll, advertising, networking, and much more. While there are many advantages to this business practice, there are many disadvantages as well. Here are some of the reasons outsourcing can potentially be problematic.

You will have less control.

When a business requests another business to handle essential functions, it can lose control over what can and cannot be done. In many cases, outsourcing companies may not be held to the same standards and mission. When it comes down to is, businesses that focus on providing outsourced services are mainly trying to make money. This could cause problems for you when it comes to controlling certain aspects of the task.

It can have hidden costs.

Companies who outsource services have to sign a contract before any tasks are handled. Unfortunately, a lot of these contracts can have hidden costs. Additionally, services not in the contract may only be completed after payment is received. If there is an issue with the contracts, this could lead to even more problems since most companies do not have legal consultants in-house. This could result in more outsourcing if the company is forced to seek out an attorney. Overall, the process can become quite pricey, especially if tasks are outsourced to a less than reputable company.

It is less secure.

It’s no secret that businesses require certain information to keep their company running smoothly, and this information may be purposely kept a secret from the public or other competitor businesses. When a company has to outsource, information could potentially be leaked to competitors without consent. Outsourcing causes a huge security risk and can cause problems with confidentiality. For example, if a business chooses to have another company handle payroll, medical records are readily available to the outsourcing company. Every business that outsources needs to take extra precautions to avoid security leaks.

It can lead to adverse publicity.

Outsourcing is asking another company to perform tasks that it cannot handle in-house. These services can be handled by a firm in the United States or even the same local area. Unfortunately, most people understand “outsourcing” to be synonymous with “offshoring.” In many people’s eyes, this can make a business look unethical and cause adverse publicity. Furthermore, when a company is forced to relocate to another state, people may lose their jobs, which causes further ill-will. It can continue to affect the workplace, creating bad morale.

You may have time-zone issues.

For companies that choose to outsource services overseas, there can be serious communication problems caused by differing time-zones. For example, if a business wants to have a firm in China or India handle advertising and you need to make an immediate change to procedure, the change may not take place until the following day. This statement is also true for companies that relocate across the nation. It’s important to take this aspect into account whenever outsourcing is being considered. Another thing to take into account when it comes to time-zone differences is how information will be shared between the two locations. Will it be conducted over the phone or online? Communicating promptly can become a huge issue, which can ultimately cost a lot of money

Last Updated: March 11, 2016