What are the Pros and Cons of Outsourcing Services?

Felicia Dye
Felicia Dye
Businesswoman talking on a mobile phone
Businesswoman talking on a mobile phone

Outsourcing services are contractors who do work that a company does not want to employ someone to handle. Utilizing these services can provide a wide range of benefits, such as eliminating the costs of employee benefits and allowing companies to operate in smaller spaces. There are some drawbacks, however, such as reduced control over project completion and negative effects on local employment.

Outsourcing services can eliminate the need to consider and negotiate costs that a company may have if an employee was hired for a particular role. For example, health insurance and child care reimbursement are benefits that potential employees often seek. Contractors, however, do not generally ask the companies that they work with to bear the burden of these expenses.

In some cases, outsourcing services can save companies significant amounts of money in other areas. A smaller workforce allows a company to operate in a smaller space, reducing the amount of rent or mortgage that needs to be paid. Also, contractors generally use their own supplies, meaning that companies do not have to spend as much money on furniture, machinery, and other items needed to complete a project.

When a person is hired to fill a role, there is a possibility that tasks may arise that she does not know how to complete. This may leave her employer with a dilemma such as whether to pay for training or to outsource that particular task. This can delay completion of a project and result in extra expense. When a company obtains its labor from outsourcing services, it generally has prompt access to a wider range of skills and expertise.

One of the cons of outsourcing services is that it can subject a company to an increased amount of uncertainty. This is especially true when the contractor works off-site. An employee can be monitored, and progress can be assessed during the course of an assignment. When a person who is not an employee is responsible for completing tasks in an alternate location and there is no risk that she will lose her employment if she does not do so, there is a risk that the job may be done unsatisfactorily or not at all.

When companies use outsourcing services, especially on a large scale, it can have adverse effects on local employment rates. This can extend to having a negative impact on the local economy. When a company creates these types of problems, it may experience a substantial amount of negative publicity that may ultimately damage its business.

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      Businesswoman talking on a mobile phone