Outsourcing Services – The Pros and Cons

By: Joan Macdougal - June 28, 2018


What Is Outsourcing Services?

 

Entrepreneur Asia Pacific defines outsourcing as follows:

 

“Outsourcing has become a major trend in human resources over the past decade. It’s the practice of sending certain job functions outside a company instead of handling them in-house. More and more companies, large and small, are turning to outsourcing services as a way to grow while restraining payroll and overhead costs.”

Every business faces the challenge of getting the costs right for revenue generation. The growth in Robotics and AI supports the well-known notion that one of the highest costs in any business is its people. So it makes good sense for business leaders to consider and explore options for outsourcing services.

Macrison provides outsourced marketing services. Modern marketing has so many variables which are complex and need to be managed. We argue that outsourced marketing services provide certain businesses with better marketing management. Better management ensures better outcomes and this is usually at a fraction of the cost of employing the skills and resources in-house.

Regardless, outsourcing services are not for everyone. If considering outsourcing, you will find the pros and cons outlined in this article most helpful.

 

Outsourcing Services – the Pros:

 

I sourced this list of pros from Flatworld Solutions and I like the detail and clarity it provides. Outsourcing services should generate the following benefits for a business.

 

  • Better revenue realisation and enhanced returns on investment
  • Lower labour cost and increased realisation of economies of scale
  • Tapping into a knowledge base for better innovation
  • Frees management time, enabling companies to focus on core competencies while not being concerned about outsourced routine activities
  • Increases speed and the quality of delivery of outsourced activities
  • Reduces cash outflow and optimizes resource utilisation

 

 

Outsourcing Services 2
There are pros and cons to every decision

 

Outsourcing Services – the Cons:

 

The benefits, whilst logical need to be weighed against any risk. Flatworld highlights the areas which businesses considered when weighing up outsourcing services and they include:

 

  • Possible loss of control over a company’s business processes
  • Problems related to quality and turnaround time
  • Sluggish response times coupled with slow issue resolutions
  • Shortcomings in performance vis-a-vis expectations
  • Lower than expected realisation of benefits and results
  • Issues pertaining to lingual accent variation
  • An irate customer base coupled with enraged employee unions

 

The Key to Successfully Outsourcing Services:

 

When choosing an outsourcing service provider you need to make sure they comply to the following checklist:

 

a. Your Service Provider is clear and transparent in their pricing

b. The services they will be providing are outlined in detail and clearly understood by both parties to the agreement

c. The resources to be allocated to your business are clearly defined

d. There is a process integration map. You need to be sure your outsourced service provider can work efficiently and effectively with all aspects of your business

e. There are measurable KPI’s that will be used to measure performance

f. There are regular and scheduled management meetings to ensure optimal results

g.  You have formal contracts in place

 

Outsourcing services 3
A close working relationship is essential

 

A good rule of thumb for assessing great outsourcing is whether it feels like the outsourcing service provider is actually a part of your team. When you have the confidence to talk to your service provider without fear or concern and you get a genuine sense of their passion and commitment to your success, you are pretty close to having it right.

 

 

About The Author:

 

Joan - The author

Joan MacDougal is the founder and owner of Macrison Co Pty Ltd. Prior to Macrison, Joan held senior roles at both American Express and Telstra. With 30 years of front-line marketing, advertising and communications experience, Joan brings honesty and perspective to her views on better marketing, communications and advertising. Visit Joan’s website www.joanmacdougal.com to get to know Joan a little better. For more information on our Outsourcing Services click here Macrison Services

 

References:

  • Flatworld Solutions
  • Jorgen Pedersen Outsourcing Process and Theories
  • Outsourcing: What’s the Theory? 1 Gordon M. Groat PhD (abd), MSc, BGS, ASc

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