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The Benefits of Outsourcing and its Disadvantages

Outsourcing Around the World

When we talk about Outsourcing, we are referring to a business in a country which hire people from another country to work for them. Although Outsourcing often takes place in the same country or even town, we will now talk about International Outsourcing, predominantly in the IT world.

A lot of businesses outsource to save time and money as well as to get the same quality of service by paying less. This kind of outsourcing gives many new small ventures and everyday people the opportunity to be employ an IT team; turning their passions, ideas, and hobbies into a possible cash flow generating career.

When I started outsourcing, it was a big help to me. I wanted to start a blog; however I was always too busy. Then I looked into it and realized I didn’t have the skills or time to learn how to properly do it. After reading the book ‘The 4 Hour Work Week’, I was inspired to start hiring and making it work for me.

Despite the fact that I have been doing a 30 minute work week for the last 4 years, I am still driven to make a good blog site and share the information I have learned and continually learning on a regular basis.

Without Outsourcing, it would never happen.

Imagine how much more you could achieve with one or two virtual staff  helping you?

 

The following are the benefits of outsourcing:

Advantages of Outsourcing

  • Access to Skilled People – You can easily find very high quality specialists. There are specialists in Quicken, Video Editing, Copy writing, Accounting, Social Media Management, you name it!
  • Cost Savings – When you outsource services like data entry, reception duties, cold calling, etc. to a low-cost country like Philippines, you are getting access to services that are available at a much lower cost (You can save 40-80% of western salaries).
  • Reduced Overhead – You don’t have to lease or build an office space for your staff. You don’t have to be obligated for holiday or sick pay, mandatory insurances, training costs, and much more. Plus you can simply hire people per task. With your current hiring methods, can you easily hire someone to work for you for just 10 hours? With Outsourcing you can!
  • Labour Flexibility – Outsourcing allows you to access extra staff resources whenever you require them. Then you can free them when the tasks are completed.
  • Process and System Standardization. I recommend a systematic approach. It’s really easy to have all of your staff spend a little time creating ‘how to’, ‘roles and responsibilities’ documents so that their duties become standardized systems for the future staff.
  • Level the Playing Field – Most small businesses can’t afford to match the in-house support services that bigger companies maintain. Outsourcing can help small companies act “big” by giving them access to technology and skills that large companies benefit from. 24/7 phone or online chat support is a perfect example.
  • Receptionist at a fraction of the price – Basically you can have a full time receptionist that will answer calls via Skype, receive and send faxes, make orders and process data entry for as low as $120USD for a 40 hour week. But it’s not just about how much you can save. Of course, we still want good and reliable staff.

 

There can be disadvantages:

  • Renewing contracts. Staff can leave for higher paid jobs. This is very common if the staff do not receive enough regular or rewarding work. 
  • Confusion with contract, roles and responsibilities. Out sourcing allows you to be the manager. If you haven’t had managerial experience or staff  before, there could be challenges here. However, wouldn’t you rather have challenges with a team of staff costing you on average $3-8USD p/h than a team of staff costing you $15-40USD p/h? Not to mention legal liability is greatly reduced with Outsourcing. Australia and America has unfair dismissal work and contracts protecting employees. I think I would rather develop managerial skills and define roles and responsibilities of staff with an Outsourced work team any day.
  • English levels vary. English level greatly vary around the world. Native English speakers are often unaware of their own accents. Most Filipino and Indian staff can understand clear English very well, you must speak clearly with them. Your staff may have strong or weak accents too (actually accent training is very common in Philippines). Some new staff may lack the confidence in speaking English with you, but you can help and encourage them.
  • Changes in communication. Talking face to face is very rare so you need to be really clear with instructions and ask for regular updates. Most online staff can talk to you over Skype. I strongly encourage this. All of my staff log into Skype when they are online, even if their not working.
  • Poor quality and tardy services among others. Poor quality is common when ever a staff works without supervision or desired levels of skills. This happens regardless of where a staff is working. Sometimes, staff may misrepresent their skills or enhance their resumes. You may need new systems for quality control or simply hire a online project manager.

 

online services

 

By having good strategies and knowledge, these disadvantages can be avoided. It will take some time to develop and get a good hold of everything; however the results are well worth the initial effort.

If your organization is genuinely interested in outsourcing, don’t let these few disadvantages stop you. You will have some problems but they are opportunities to grow! Sort them out and learn from them. Create strategies and procedures or better yet, have your Outsourced staff write these up themselves as their starting task. 

 

 

There is more in the Outsourcing Game you need to know. I strongly suggest:

  • Read all of our articles on Outsourcing.
  • Use our VA (Virtual Assistant) guide to start with your first online staff member.
  • Outline very clear tasks and responsibilities to your VA.
  • Build up tasks and responsibilities one at a time.
  • Have your VA re-write their roles and responsibilities to ensure there had a complete understanding. Also if your VA leave, or get promoted, a new VA can easily take over their roles.
  • Re-read our articles and don’t be afraid to ask for help.
  • GIVE IT A TRY!!! Sign up to ODESK and give it a go today.

 

Have a great, happy and productive day!

 

Adrian and Yves (VA)

One thought on “The Benefits of Outsourcing and its Disadvantages

  1. “By having good strategies and knowledge, these disadvantages can be avoided.” — Right! Outsourcing, when done right, is good for business. It’s all about excellent collaboration strategies (from both parties) as well. There definitely are more benefits than the disadvantages and businesses have already succeeded with this practice.

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