Advantages and Disadvantages of OUTSOURCING

Out sourcing occurs when a business secures products or services from a third party, as opposed to producing them in-house. there are several advantages and disadvantages of outsourcing.

ADVANTAGES OF OUTSOURCING: One of the biggest advantages can be
lower personnel costs. By outsourcing job duties to non-employees , a business does not have to pay consistent wages after because independent contractors, the people who complete the outsourced projects, pay their own with holding, social security, and other taxes. This can add up to substantial savings.

Some business choose to take their outsourcing one step further by choosing a vendor, located in another part of world doing so typically saves them more money because they end up paying a much lower wage than would be necessary in their home country.

Many times outsourcing speeds up production time since the third party vendor will only be concentrating on one specific tasks, instead of numerous office duties, actual production time can be greatly increased.

Out sourcing gives a business the flexibility to change third party vendors whenever necessary. this process is not as time consuming as the normal employee hiring process, because they are not screening individuals, they are considering established companies with proven track records.

An excellent example of this is customer service, when business outsources its customer service department, it does not have to hire and oversee thirty individual operators instead it can hire one call center which will perform all needed tasks.

Disadvantages of Outsourcing: One of the biggest disadvantages of outsourcing is undesirable results, this is especially true when a company hires a third party vendor to mass produce a product. in the event the finished products do not meet quality standards the manufacturing process must be repeated by different vendor

Not only is this a waste of time and materials, it can also be very costly for the company who outsourced the project. they are essentially paying twice for the same job. may lose sales during this same period because of the lack of available product.

Outsourcing customer service jobs to foreign countries is on the rise. Many large corporations including credit card companies, shopping networks and computer manufacturers are making this change.

The problem with this is lack of communication it can be frustrating for a customer who is calling in with a customer service issue.

For new management students and emerging entrepreneurs understanding of outsourcing advantages and disadvantages is very helpful in long term business continuity.

lali krishna