We often hear about the advantages of outsourcing, but you also should be aware of the disadvantages of outsourcing as well. Any business owner that is considering outsourcing some functions over to someone else should be aware of both the good and bad points of outsourcing. Sure, many will tell you not to focus on bad things but rather to think positively. However, if you want to use outsourcing to its full potential, then you also need to be aware of the disadvantages of outsourcing.
Some of the Most Common Disadvantages of Outsourcing
According to many small business owners that I have spoken to, here are the most frequent disadvantages of outsourcing that were mentioned by them:
Loss of complete control over your business
When you outsource part of your operations to an external provider, you are no longer in full control of that aspect of your business. For example, if you have someone else call leads on your behalf, they will be doing the calls and not you. Therefore, you will not be in direct control over what happens on every call that they make.
Issues of quality
Quality is something that is often talked about when disadvantages of outsourcing are discussed. Can you really be sure that the company or person that you will be hiring will do a good job? Will they follow your instructions accurately and complete the work on time, just like you've asked them to? These are all very important questions that those who outsource frequently ask themselves. After all, you do not want your business to suffer because of an outsourcer that did a poor job.
Issues over confidentiality and security
Depending on what kind of business you run and which tasks you outsource, this may or may not be an important issue for you. You should, however, be aware that outsourcing some of your operations to third parties could create security risks. For example, if you outsource the management of one of your web stores to someone else, you would be giving them access to your customer data.
Can you really trust them not to misuse that information? Also, in some cases an outsourcer could have access to information about how you run your business. Things such as the names of your suppliers, the keywords that you target on your pay per click advertising campaigns, the prices you bid on these keywords, etc. all come to mind. Once again, will you trust the party that you outsource these operations to not to use the information that they get access to for their own benefit?
Minimizing the Disadvantages of Outsourcing
Let's face it, there are many aspects of running a business which have both advantages and disadvantages. For example, certain marketing methods could have both positive sides as well as negative sides. The decision rests with you as to whether the positive points outweigh the negative ones in that case. The same thing goes with outsourcing. But you should know that there are many ways to diminish the disadvantages of outsourcing. One of these would be to choose quality partners to outsource your tasks to. Don't simply select an outsourcer based on price. You should also be sure that they will be reliable, honest and will always deliver quality work to you. This means checking the reputation of the person or company that you are planning to outsource to beforehand.
Before you outsource an important or sensitive project to someone, try to get a feel of whether they can be trusted by giving them some less important or smaller tasks before. Think about whether you have experienced any problems and whether you would feel comfortable working with them in the future. Don't forget that outsourcing can be very beneficial to any business. As such, use common sense and don't let the disadvantages of outsourcing keep you from doing so if you believe that it will have a positive impact on your business.
P.S. Do you want to see more tips on how you can successfully manage your business? If so, go see some of my other posts like how to start a website and make a life worth living.
Feel free to leave comments or questions in the box below and don't forget to sign up to receive more information by putting your email in the box on the upper right.
Prime Outsourcing · September 6, 2012 at 2:48 pm
Interesting post Lawrence. I think in every aspect there will always be the opposite side of it. It’s a matter of how you view things and your perspective in this kind of business. People may be uncertain of this type of transaction but they may also give outsourcing the benefit of the doubt. So whatever choice people may opt to do, it’s as simple as, you can turn every positive to negative, and you can definitely turn every negative into a positive one.
Thanks for sharing!
Angelique · February 11, 2012 at 5:09 am
Interesting post, Lawrence!
It’s better to be aware of these disadvantages in order for you to be prepared on what’s to come. One other example of a disadvantage is there’s no way to be sure on whether the person you’ve employed is going to do the job they are paid to do. That’s why we need to have a great hiring method. Because all we are left to do is trust the person we’ve employed and hope for a high quality result. After all, business is about taking risks.
However, I could share to you one tip from an article I’ve recently read. By creating a virtual workspace, it will allow you to communicate to your team efficiently and will also provide accountability. Instead of wasting money on bricks for a real office, you could use virtual workspace software like Mantis, Drop down and TimeDoctor for employee monitoring.
Jeri · November 25, 2011 at 2:14 pm
I am in a class in collage called Operational Management Principles and I have to write a 400-600 word paper on the pros and cons of outsourcing. Your page has helped me alot with my paper.
Siddarth Rajsekar · August 25, 2011 at 7:35 am
Great content Lawrence..! I went through your webinar on MLSP and found it pretty cool and useful! Wish you all the best.. and stay in touch.
Lawrence Tam · August 25, 2011 at 10:56 am
thanks for the comment and checking out my trainings. I think i have 3 total in MLSP. I have more here, dig around and check out what else I teach 😉
the most concentrated materials are in the upper right in my bootcamp