Outsourcing: Advantages and Disadvantages

Milica
by Milica

August 8, 2017

Now times you can start and grow a business without any significant investments. Sometimes your startup can’t handle all the tasks, so that is where outsourcing steps in. Many say that they are satisfied with the service provided, but there are some that were not. With this having in mind, in this post will be going over advantages and disadvantages of outsourcing.

There are two points of view that we will be reviewing in this post. First one is client’s since they are always looking for the best price-quality ratio and fast service. Another one will be company’s point of view because they are often looking for motivating hourly wages and easy-to-work-with clients.

There are highly experienced digital nomads that could quickly get the job done. On the other side, if you have something super easy that you don’t want to bother your developers with, there is always an option of finding someone who is still learning through any of the platforms that we wrote about.

How many people do you need?

As we sometimes said, if you can’t do all the tasks in-house, outsourcing can be handy. When you hire 2 or 3 virtual assistants, they can get the job done much faster, which is a big time saver. However, you would ask yourself “Is this expensive?”. Well, depending on what your goal is, you will eventually expand operations, and the capital exceeds expenses. Keep in mind that time is money.

I want to outsource!

Often when having a startup company, you won’t be having access to skilled employees. Well, there is another outsourcing benefit that is useful here. Filipinos are young, educated, English-speaking, qualified and very experienced. And the best thing about this is that they don’t require any training and you can access their skills and knowledge that might be useful for you in the future. You never know when big project might come up, better be ready!

Is outsourcing good?

Here quality features both as an advantage and a disadvantage in this discussion. Sometimes companies are more motivated by their profit rather than doing a good job. By cutting down costs, the quality can be weakened. Since your product has fixed price and the only way is to decrease expenses. That may mean that your product will lack the standard that consumers expect.

Expenses of outsourcing

Outsourcing is considered cheaper, but you must be aware of getting ripped off. In the beginning, you will sign the contract, so there might be some hidden costs. Anything not covered by the agreement will be an additional service that you will eventually pay as an extra charge. Also, you will pay a lawyer to review the contracts you signed.

 

ADVANTAGES OF OUTSOURCING

CLIENT’S POINT OF VIEW

  • good price-quality ratio
  • fast service
  • saving time
  • focus on core areas
  • not hiring more people
  • access to a larger talent pool
  • cultural exchange
  • cost savings
  • ability to start many projects at once

COMPANY’S POINT OF VIEW

  • presence on the markets where you are not physically present
  • whole world is the market
  • working on the big projects
  • networking
  • business trips
  • experiencing big and interesting projects
  • getting a better price in bigger markets
  • hiring more people
  • easy penetration into the global market

DISADVANTAGES OF OUTSOURCING

CLIENT’S POINT OF VIEW

  • risk of choosing a bad partner
  • time difference
  • language barrier
  • lack of control
  • communication issues
  • problems with quality

COMPANY’S POINT OF VIEW

  • huge competition
  • devaluation of services by firms from third world’s countries
  • flexible working hours
  • time difference
  • language barrier
  • risk of not getting paid

Conclusion

In summary, outsourcing seems to have both positive and negative impacts. The positive side is that you can hire experienced employees, who will help your business grow. The downside is that you might experience lack of quality.

Based on this discussion we think that outsourcing will be good for your startup. However, we advise you always to read the contract carefully and not to rush when hiring somebody!

If you want to learn more about us and our business model, please go to our very first post.

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