Outsourcing can be a boon or a bane. If you let others do things for you, expect that there are advantages and disadvantages. When you hire a domestic helper to do your laundry and cook your dishes, there will be moments when you feel fulfilled for hiring the person, and there will also be times when you would seriously consider if you made the right decision.

In the business world, this happens, too. This is most especially so if you are big business, and you outsourced some of your key business processes to a partner.

Outsourcing Stack Up

Here, we will explore some of the advantages of outsourcing, and also some disadvantages that you need to mitigate.

PROS

Here is a list of the positive things you can expect from business process outsourcing.

  • Reduced Labor Cost – labor in first-world countries are costly. In fact, you should be ready to shell out at least $10 per hour of labor. If you outsource to BPOs in the Philippines, the $10 can be stretched as salary for a person for an entire day.
  • Reduced Infrastructure Cost – if you build your own infrastructure, you will spend hundreds of thousands of dollars. If you outsource, the building, electrical components, computers, training rooms—everything is already set-up. The only thing you need to do is to deploy a trainer, and set up the systems to make sure they work according to your specifications.
  • Expertise – Philippine outsourcing companies are experts. The management knows how to hire the right people, how to train them, and where to find them. If you conduct your own business, you need to create your employee handbook, hire a lawyer, set-up your human resources team, and so much more.

Essentially, outsourcing helps you eliminate the grueling work that you need to accomplish just to establish an arm of your business. If you outsource, everything is ready. All you need to do is to create a contract, set expectations, hire, train, and deploy.

CONS

Like all other things, some things can go wrong if you partner with business process outsourcing companies. Here are a few examples.

  • Quality Control – since you are managing remote partners, you should expect fluctuations with the quality of the job. One key element that affects outsourcing providers is that they never get to use the actual product that they support. You can help mitigate this by creating sandbox training modules that will simulate your products.
  • Liability – to the customer’s eyes, everything that an outsourcing company does is your accountability. Your customer does not know that the person she is talking to is not an employee of your company. As such, all legal actions that consumers can make will be your liability.

You can mitigate this by stipulating clauses in your contract that puts the outsourcing company liable and equally accountable.

Summary

Despite the cons, the pros will significantly outweigh whatever negative elements are present in outsourcing. And if you will really wrap your head around it, you can help manage these risks if you create an agreement with the outsourcing specialist to share your losses and liabilities, if you can prove that they were at fault.

For inquiries, write to bd@athl.com.hk.