Benefits and Shortcomings of Outsourcing
The term outsourcing has widely spread in America. Outsourcing is not limited to manufacturing since it is possible to get customer support from people in other states. However, being popular is not an indicator of outsourcing being an all-time option. Outsourcing has its cons and pros as explained in this article.
You will benefit by outsourcing because it lowers labor costs. Among the most important determinants of the price of a commodity is the labor cost. Prices at which companies do offer their products are determined by the much its labor costs. America has a higher cost of living, making factories to spend a lot in wages. However, India and Chinas cost of living is lower and you can pay employees less and meet their needs. This lowers the cost of manufacturing hence able to offer, allowing them to offer products at a competitive price.
It is good to outsource because it creates more hours. While there are 40 working hours a week for the Americans, time is not a concern when technical issues are concerned. If this company wants to provide customer support in-house, its offices would need staffs to work 24/7, meaning you could operate with a three-shift program. Employees who work at mid-night get disorders such as insomnia, difficulty with personal relationships, difficulty in concentrating, irritability, lack of energy, and insufficient sleep. For India, American midnight will be day time and it will not be a big deal for people responding to customer service at India. In fact, a number of IT providers outsource to each time zone to increase the time they provide services.
Outsourcing is disadvantaged in that there is less quality control. When your company does everything in-house, you can perform the quality check by walking around. Outsourcing from a different country makes it hard to control quality. Issues can thus go on for weeks only to be noticed when customers complain or one taking an oversee flight to check what is happening.
Outsourcing is disadvantageous in that is lowers the morale of employees. When employees are not secure in their jobs, company morale gets damaged. When you decide to outsource different services overboard, the remaining staffs begin feeling insecure. They tense and begin to search for greener pastures.
Outsourcing is disadvantaged by cultural barriers. Value systems slightly differ in various parts of the world, making what a region sees acceptable to be a taboo in another region. If the outsourced company does not have the same cultural values as your business, they may have different business priorities hence causing problems. Also, language barrier brings about frustrations among service providers and customers.