Advantages and disadvantages of OUTSOURCING

outsourcing is a business model based on the subcontracting of another company to perform certain functions.

Advantages and Disadvantages of Outsourcing

More about outsourcing

Outsourcing is usually hired to manage complicated tasks. It is a very common practice among large companies. There are many reasons for this practice such as increasing productivity or increasing the speed of response to an order.

In addition, there are several types of outsourcing depending on the number of functions you outsource. You can outsource entire areas (Business Process Outsourcing, Knowledge Process Outsourcing) or just a specific part (selective outsourcing).

In the following article we are going to present a number of advantages and disadvantages of outsourcing.

Advantages of outsourcing:

  • Cost reduction. It reduces the cost of certain production processes. It is more profitable.
  • Time saving. Allows other actions to be carried out, such as research into new areas.
  • Quality improvement. The high degree of specialization of this type of company generates a qualitative improvement.
  • Increased performance. Generates an increase in efficiency in different areas.

Disadvantages of outsourcing:

  • Dependence. The use of outsourcing generates dependence on external companies.
  • Privacy. The key to many companies is the working method. A secret that will cease to be a secret if it is outsourced to other companies. It is advisable to pay close attention to data protection.
  • Less control. There is some loss of control over the production of outsourced areas.
  • Difficult to rectify. Outsourcing to external companies is a very complicated decision as it is costly, or even unfeasible, to go back. It is advisable to study in depth the pros and cons of the particular case.