Outsourcing first came about as a way companies, and individuals, could lower costs by having assembly and manufacturing done in countries where costs were much lower, with no loss of final quality.
This was mainly due to lower average wages, and lower operating costs.
Obviously cost reduction results in vastly improved profit margins for these companies Recently however, outsourcing has been gaining in popularity due to several other causes.
Cost reduction is still, of course, a major factor, but other advantages are becoming apparent, such as the possibility of having industry experts work with you, access to a much larger workforce, and far more capability to react to fluctuating market conditions.
Outsourcing Pros and Cons - Cost Reduction As mentioned previously cost reduction was the original benefit of outsourcing, and although this is still one of the main advantages, other vital benefits are coming to the fore.
Individuals are now looking to outsource tasks which would be difficult and costly to complete single handed due to lack of time, or knowledge, or both.
A prime example would be a software task, which without the benefit of an on site expert would be either delayed or postponed.
These tasks can now be completed by using outsourcing, in very short time frame, and at an affordable cost.
It would be very costly to employ an in house expert, especially if the task was a short term, one off requirement.
Outsourcing will allow you to employ the right person, or people, at the right price, for just the duration of this one task.
As your business grows you will be able to go back to the same people time and time again, as your work relationship builds with them.
Outsourcing Pros and Cons - On Call Expertise We have discussed how having experts in specific tasks can result in cost savings for the company, but there is a further benefit in that having qualified experts virtually on tap, you can go after larger, more specialized types of contract, now you are able to take on far more advanced projects than previously.
Outsourcing Pros and Cons - A Larger Workforce Yet another advantage of using outsourced specialists is the ability to have far more manpower when needed, without the hassle of having to maintain your own employees.
By outsourcing you are able to bring in additional expertise, in just the right fields, as and when needed, without having to concern yourself with keeping them fully employed when the project ends, or having to lay people off when workload drops.
If your particular field has peak periods of intense work, followed by troughs, then this facility becomes especially valuable to you.
Yet another advantage of outsourcing is that by having a larger, flexible workforce, you can generate far more profit.
Smaller companies can find themselves at a disadvantage when going for contracts against large companies, outsourcing gives the flexibility to overcome this disadvantage.
Outsourcing Pros and Cons - More Flexibility Everybody has probably experienced the situation where all is going to plan in a project, then a problem arises, completely unexpected, and therefore unplanned for.
Small companies will at this point have a problem due to time schedules, however if outsourcing is now brought into play, additional expertise can be brought on line, in exactly the right areas, to bring the project back on course.
Outsourcing Pros and Cons - Summing Up Having taken on board all of the above benefits of outsourcing, it can be seen that with a little preparation beforehand of where and how the relevant expertise can be found, outsourcing can be used to great advantage in advancing your business, whether you work alone, or run a company.