The pros and cons of outsourcing

Reducing the costs of medium and large companies is one of the most important goals of entrepreneurs. The lower the costs, the higher the profits and the improvement of the company’s processes will make its activity more efficient.

You might think that the only advantages of outsourcing a company’s activities are the big cost reductions. In reality, outsourcing is more than that. It has many other benefits, such as the opportunity to hire experts from various fields of activity and allow your employees to focus exclusively on core skills, according to NorskeAnmeldelser.

Recently, with the development of customer support services, customers’ expectations have begun to increase considerably in terms of how to communicate the needs and problems of the company they buy from, and companies have begun to realize that the concern of customers is paramount.


What do outsourcing services mean?

Outsourcing certain services or processes of the company mean hiring an outside company specialized in a certain field to deal with this part of the business, for which there is no know-how and for which the investment in resources would be significant. You can outsource any type of service, from accounting to production, to software development services, human resources, and much more. You can find out a lot about this on Azimo.

Like any business move, this outsourcing has both advantages and disadvantages, but from the point of view of entrepreneurs and managers, the advantages are significantly greater than the disadvantages.

What are the advantages of outsourcing services?

Outsourcing can free up money, staff, facilities, and time resources for a company. This can lead to cost savings due to reduced labor costs, taxes, energy costs, and reduced production costs.

Here are the key benefits:

  • reducing the company’s costs simply because it is no longer necessary to recruit staff, their schooling, additional office space, furniture, telephony, and computer infrastructure and avoid costs arising from salaries, benefits, bonuses;
  • increasing the company’s efficiency by focusing on the field in which it specializes, so on the main profit-generating activity;
  • permanent consultancy from the team of specialists to whom a certain service was outsourced;
  • quick access to information through applications developed by outsourced service providers, given the total transparency of the processes, carried out by them

Possible disadvantages of outsourcing services

While outsourcing has many advantages, it also has some disadvantages. The relationship with the third party taking over the outsourced functions must be managed. This includes negotiating and signing contracts, which require time and the involvement of a company’s legal advisor, as well as daily communication and supervision of outsourced work.

  • difficulties in identifying the right suppliers without calling on a consulting company to deal exclusively with this issue;
  • possible difficulties in adapting to the way of working of the service providers;
  • possible difficulty in adapting to change;
  • loss of know-how in certain areas, know-how that could expand the capabilities of the company.

There may also be a negative impact on public relations for a company when outsourcing leads to the loss of a large number of jobs. Security is an important factor in outsourcing. The relationship will inevitably involve the third party’s access to sensitive business data, trade secrets, and other confidential information necessary to perform its contracted function.