Advantages and Disadvantages of Outsourcing Projects

Advantages and Disadvantages of Outsourcing Projects

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Abstract

Outsourcing is a modern business trend, which becomes more and more popular on daily basis, as many companies decide to take advantage of outsourcing their minor functions to the overseas contractors in order to reduce costs. IT development, project management, training administration, software service and customer care are the responsibilities, which are normally outsourced overseas. With that being said, the companies, which make a decision to outsource certain responsibilities to the other companies. This not only allows focusing on the major things, important for the business strategy and skipping the minor details, but also helps to cut the costs.

However, as well as any innovational business tendency, outsourcing has its advantages and disadvantages. Among the advantages, it is important to note cost efficiency and eliminating minor issues which could occur if the project was being worked on within the company. The disadvantage is loss of control of the whole organization, possible cross-cultural challenges and possibility to lose the sensitive data upon the breach of contract with the outsourcing subcontractor. With this being said, the nature of outsourcing remains controversy and depends on every particular organization, who is interested in being involved into this process.

Advantages and Disadvantages of Outsourcing Projects

Nowadays, in era of modern technologies and internet connection, the question of using outsourced agents to perform certain job is something usual. Before analyzing the question of the pros and cons of outsource, let us consider, what is outsource and why is it becoming more and more popular nowadays.

Outsourcing is basically hiring someone from outside. This person cannot be considered to be an employee, as they remain outside of the company. Though, these individuals or independent firms perform a certain kind of job for someone. Nowadays it has become a common practice to outsource certain jobs to the specialized service firms, which normally operate in terms of providing this sort of service. Usually, the outsourcing companies are located abroad. With this being said, the tendency of outsourcing becomes a global trend, and the number of outsourced vacancies tends to grow on daily basis. The most common field for outsourced projects is customer relations and IT, data operations, network operations, etc.

The tendency of constantly growing in outsource is caused by the certain change in the overall philosophy of the business, since up to 1980s, many countries were willing to acquire as much companies of their interest as they were interested in and could afford, to maximally reduce the risks. Though, many companies realized, that running a huge diversified business is a challenge that is why there occurred a shift, which made the companies focus on less number of closely related or similar businesses, preferring to transfer the ones, which they are not specified in, to the other contractors. This way, many companies managed to develop their own specific, unified ‘core competence’, which could provide them with competitive advantage over their competitors. The minor functions, being non-mandatory, are a subject of outsource (Referenceforbusiness.com, 2015).