Disadvantages of outsourcing also prevail. Just as outsourcing may prove to be beneficial to companies, the management of a company should weigh the advantages as well as the disadvantages of outsourcing before actually opting for the process.
Outsourcing (the transfer of business function of one company to another) is primarily undertaken for saving costs of the company. Even though outsourcing may have many advantages or benefits, there exist few lacunae in the entire process.
Some of the recognizable aspects, which prove to be disadvantageous for the company, include the following:
Disadvantages of outsourcing:
The company, which transfers business to another company, may be cutting down on expenses but it loses managerial control.
The reason being, it is difficult to exercise control on the staff of another company than controlling ones own employees. Outsourcing may seem to reduce costs but there are many hidden costs, which are not taken into consideration by the outsourcing company.
The hidden costs may include the cost of framing a contract and updating them from time to time.
It is a well-known fact that there are several segments of the company, which are outsourced. In the event if any company’s payroll system, salary issues and any other confidential information is outsourced, this may lead to sensitive information from being spilled out. So, outsourcing impacts the security of a company.
Some are also of the opinion that outsourcing causes damage to the labor market locally.
Disadvantages of outsourcing also entails that owing to outsourcing the business value is lost.
Outsourcing, it is said leads to the exploitation of workers who are lowly paid.
The quality of service gets affected. Measurement of service quality is through SLA or Service level Agreement, which is contained in the outsourcing contract. Contracts, which are not defined appropriately, do not possess any quality measures.