5 Disadvantages of Outsourcing & Why They’re Not Always a Problem

by | July 28, 2020


There is no doubt outsourcing has become a highly contested topic in American politics. For domestic workers, nobody wants their job to go overseas. Likewise, lobbyists like to protect domestic workers, ensuring their jobs are safe from outsourcing. However, for small businesses, outsourcing does not necessarily mean stopping everything and moving operations to a foreign country. It could be hiring freelance workers or utilizing a marketing agency to help grow your business.

It is a tough decision for companies to determine whether to outsource a particular operation or not. To help managers and business owners weigh the positives and negatives of outsourcing, here are five disadvantages to outsourcing and a couple of big reasons why they are not always a problem.

Top 5 Disadvantages to Outsourcing

1. Service Provider

There is no guarantee your outsourcing provider is driven by the same mission and standards as your company. Likewise, they may not have the same passion for your product or service as you do. The vendor’s bottom line is to make a profit for their services. To guarantee you and your service provider are equally committed, you must formally agree on targets for the service provider to meet as well as hold regular meetings to ensure satisfactory progress for both parties involved.

2. Quality Service

When a company decides to outsource its service, quality internal support is no longer their responsibility for that service. For instance, if you subcontract to a payroll provider, you would hope their payroll system comes equipped with the latest payroll software and upgrades. However, sometimes that is not the case. Luckily for businesses purchasing a service, you always have the option to move to a provider with the latest technology.

3. Quality Control

Other significant risks to outsourcing include losing sensitive data, losing confidentially on outsourced activities, and losing management and control on all outsourced operations. Lack of quality control is a result of outsourcing because the outsourced sector is out of the company’s hands. It can become an issue if the outsourced company is more focused on profits rather than doing a good job.

4. Quality Work

Another critical point to consider is whether you are hiring high-quality workers. As a business, you are always striving to keep operating costs at a minimum. However, there may be a reason why the prices for some outsourcing companies are so low. If you are too cheap with outsourcing, you may end up with lower-quality professionals, which negatively impact your work.

5. Outsourcing Provider

Many outsourcing providers work with multiple companies. If you are working with an outsourcing provider that already has several clients, they may not give your company 100% of their time and effort. The lack of attention may result in inaccuracies and delays in work output, thus hurting your bottom line.

Roles When Outsourcing Does Not Cause Negative Consequences

1. Increased Operation Time

One of the crucial benefits of outsourcing, especially to overseas countries, is your business operates in different time zones as well as holidays. Although this can be logistically challenging in the beginning, once set up effectively, outsourcing overseas means your business is running even while you are happily asleep.

2. Enhanced Ability

Risk assessment and analysis are some of the most important factors for any project. When your company outsources processes or campaigns to experts in their respective industries, you benefit from their enhanced ability in a particular manner. Enhanced ability helps plan and mitigate against potential risks.

How to Combat Concerns With Outsourcing and Turn Them Into A Positive

If considering outsourcing a particular activity, it paramount that you understand all of the potential risks involved. Luckily, thorough planning and research can help mitigate the potential risks listed above. With tedious preparation, you can find a company that meets your expectations and can reach your targeted goals. With the right plan and partner at your side, both you and your outsourcer partner are well prepared to handle even the gravest risks or setbacks. And not to forget, the employee-vendor relationship can bring both positive results and be a beneficial experience.

Now, let us not forget, if an outsourcing agency’s price seems too good to be true, it probably is. Do not waste your time trying to nickel and dime every expense to maximize your costs. Find an agency that can get results without putting a strain on your budget. Likewise, continually track their progress to ensure they are up to your standards. And if an agency struggles to reach the level standard of your liking, you can always terminate the relationship and find another partner. There are numerous outsourcing agencies always looking to find new clients, with many eager to meet your requests and not cut corners along the way. If you take the necessary time to find the right agency, outsourcing can be an undeniable success for operations.