The Pros and Cons of Outsourcing
February 26, 2008
Have you considered outsourcing some tasks in your business? Outsourcing has become popular, but like all great ideas, there’s some pros and cons. Check them out to decide whether outsourcing is right for your business.
The Pros Of Outsourcing
It Frees Up Your Time: Outsourcing mundane and routine tasks frees up your time, so you can concentrate on building your business.
You Save On Labour Costs: Outsourcing to countries where labour is cheaper means you cut costs.
No More Payroll: Payroll can be pain and outsourcing instead of employing people saves you having to do it.
Plug The Skills Gap: If there’s a lack of potential staff with particular skills in the area you live in, you can overcome the problem by outsourcing.
No More Costly Office Space: Outsourcing saves you having to spend a fortune on renting an expensive office.
You Won’t Be Left In The Lurch: If you use an agency that provides adequate cover, you won’t need to worry about covering holidays, sickness etc.
Lower Equipment Costs: You won’t need to worry about the costs of equipment, computers etc, or repairs and maintenance.
Convenience: If you outsource virtually everything, you can work from home, or anywhere else you choose.
The Cons of Outsourcing
Communication Problems: Language or cultural barriers can cause misunderstandings.
Time Difference: It’s more difficult to keep in touch with a Virtual Assistant if they’re from a different time zone. Also, they could wind up waking you up in the middle of the night if they forget (this once happened to me at 3am).
Lack of Team Spirit: It’s more difficult to build a successful team and create a feeling of belonging, if you outsource, instead of employing people.
Your Local Economy Won’t Benefit: Outsourcing everything prevents you from providing work to local people.
Security Issues: The security of your business may be at risk if your VA has access to your computer system, business credit card etc.
I’ve outsourced some things before – such as call answering, site design and a bit of writing. And I must admit, I’m tempted to take on a VA on a regular basis if I can find a good one.
Have you outsourced any business tasks before? How did it work out? Would you be tempted to outsource and if so, what tasks would you outsource first? Or do you feel that the cons of outsourcing outweigh the pros?
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Hi Catherine,
My business partner and I often discuss our desire to outsource, but at this point we don’t have enough business to justify the position.
Also, you’re talking about VA’s, but we’d probably hire someone to come work at our studio.
Then again, it looks like I’m talking about an employee versus outsourcing
Anyway, thanks for sharing the pros and cons.
Nez’s last blog post..Dungeons and Dragons in Real Life
Hi Nez – only you can decide whether to take on an employee, or if outsourcing would be a better choice. And it sounds like it’s something you’re considering for the future.
Maybe you could use a freelancer at first, until you become busy enough to take someone on on a regular basis?
Hi Catherine. Good list of the pros and cons of outsourcing.
I’ve subcontracted locally for years. But only recently I took my first baby steps in offshore outsourcing with some HTML & CSS work to an Indian service provider. Worked out great.
My girlfriend also found a personal assistant last month on eLance. Seems to be working out ok.
It’s fairly easy if you can find small isolated jobs to test with first and add more tasks as you get more comfortable with the process.
sterling okura’s last blog post..Fishing With David Lynch: Creating Value From Nothing
Hey Cath,
I’ve always said work smarter, not harder. Outsourcing can save you a lot of headaches when you run into a sticky project.
James and I took our first steps into outsourcing when working with complicated code had me losing sleep. There’s nothing wrong with admitting you don’t know it all.
Harrison McLeod – Men with Pens’s last blog post..Why Your Novel Isn’t Written Yet
Hi Catherine,
I believe it also depends on what type of business you have and the size and caliber of the local employee pool.
Outsourcing wouldn’t be applicable to our small business, but if it was, we would prefer to hire people from our area and help the local economy.
Barbara’s last blog post..Help For Life Issues From The NBOTW
Hi Sterling. It’s good that outsourcing is working out well for you so far. It sounds like a smart idea to test them out on a few small tasks first – I’ll definitely bear that in mind thanks.
Hi Harrison – that is so true. Sometimes you can spend hours struggling to do something you don’t understand, when outsourcing it to a pro and got it done in a few minutes.
Hi Barbara – it’s nice to help your local economy when you can isn’t it. And as you say – some jobs just aren’t right for outsourcing.
cathlawson’s last blog post..The Pros and Cons of Outsourcing
I’ve heard of software companies outsourcing some work and getting inferior results, forcing them to scrap it and start over. But where I work now, they have a few people in Russia who are just amazing. I guess references help when dealing with the unknown.
Hunter Nuttall’s last blog post..Free Ebook: The Zen Of Blogging
Hi Hunter – it’s funny you should mention that. Some Russian temps did some work for me once and they were extremely hardworking. But it depends what you want them to do. You need to consider the language barrier when weighing up the pros and cons.
cathlawson’s last blog post..The Pros and Cons of Outsourcing
Outsourcing becomes an inevitable issue for those who operate a large number of websites, particularly if those sites are “info sites”.
Typically website operators have to consider outsourcing for SEO and Content creation. Both are risky.
If the content being delivered to you is poor quality or poorly researched, it can reflect negatively on your site or cost you additional time in having to edit or rewrite what your writer has given you, which is exactly the opposite of what you were attempting to achieve in the first place. The worst case scenario in this regard, however, is that your writers may open you up to legal liability if the content they have supplied to you was not “theirs” to begin with (copyright infringement).
Outsourcing SEO is even more dangerous. If you outsource your link development, god knows what you’ll get back. Maybe you’ll get five quality links from well established domains, or maybe you’ll get five thousand links from a spammy link network that are essentially worthless. Will these types of links hurt you? That’s debatable. Ultimately, a website operator has no control over who links to his or her site so, logically, incoming links shouldn’t hurt you, no matter how worthless they are (but did you really want to pay for worthless links?). The danger factor comes into play when your SEO “expert” decides to link your site to someone else’s link scheme. The consequences there could include a loss of visible google toolbar pagerank (no green), a true loss of ability to pass reputation on to other sites (pagerank), or, in worse scenarios, a deranking in a search engine’s listing (i.e. manual penalty, such as the -30 penalty), or, the very worst, no longer being listed in an index.
Outsourcing is just plain risky in the web world and should only be considered in situations where you implicitly trust the individual(s) you would consider outsourcing to. And there aren’t many of those.
Hi Tim – These are great points. It would kill your reputation if there were heaps of factual errors in your content, or some of it was plagiarised. And really, if you were going to outsource a whole heap of content, you’d need to employ or outsource to a fact checker too.
Outsourcing SEO sounds like a huge headache. And as you point out, it could land you in a whole heap of trouble if you chose the wrong people to do it.
Look what happened to BMW when they were binned from Google for hiding keywords on there site. Mind you, I don’t know if that was done in house or outsourced.
I’m a big believer in outsourcing. Particularly for those businesses that wish to grow as it helps them scale up quickly without all the recruitment and time challenges.
Of course, you have to do your homework first and weigh up the pros and cons, and wherever possible insist upon a trial of some sort or escape clauses to give you an opt-out.
Ian Denny’s last blog post..The Best Bloggers Are Left Handed
Hi Ian – I’m keen on the idea too. Like me, you know how difficult recruitment can be. At least you can test the water first by outsourcing.
My “business” is not big enough for outsourcing, so I’ll keep this post on the backburner for whenever I need it
!!
Thanks
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I just came across your postings and wanted to add my 2 cents.
As you discuss outsourcing, do not confuse it with off-shoring. Some defined it this way to me
out-sourcing is about process, off-shoring is about location.
not all out- sourcing is off-shoring, there are many domestic out sourcing arrangements available.
Regards
We’ve used Getafreelancer.com with mixed results. On the one hand its nice to pay someone from india 30 bucks to do a job that would cost 300 bucks on this side of the water.. on the other hand.. you get what you pay for. Frequently we find that freelancers miss deadlines. And the language barrier can be a real nightmare. Great article
I agree, the only problem with out sourcing is the communication and other things that are involved, but the prices are just unbeatable.
Albert’s last blog post..Why Tagging Posts in General is Important
I thought I would come in and offer some information from the virtual assistant perspective.
When you outsource you need to make sure the provider you are working with is qualified for your needs, VAs often specialize in certain areas.
As for communication there are colaboration tools that many VAs use, I use CentralDesktop. This is a very useful and powerful tool that can be accessed by both the VA and the client. You can store files, have live conversations, comment on files, create tasks and much more. This will also allow you the team connection you may feel that is lost, because you can allow access to other team members. Also a good VA will be very aware of time zone differences and respect your personal time. I am located in the Mountain Time Zone in the US and have worked with clients internationally with no problems.
There is a free ebook available at VAnetworking.com for business owners that are looking for a VA, it will show you how to find your perfect match and be completely comfortable with your virutal assistant. If you are interested in the ebook you can download your copy here: http://www.vanetworking.com/find-a-virtual-assistant/ Also if anyone has any questions about VA please feel free to ask me here:
Erin Stinson’s last blog post..The Benefits of Outsourcing to a Virtual Assistant
n general I don’t see outsourcing as a positive move for either the company who choose that route or their staff. I can see why management want to take the outsourcing route; it should reduce costs and it can remove an organisational headache that simply can’t be solved by internal re-organisation, however my money rests on keeping things in-house and I would bet that money guessing a lot of other IT professionals think that too.
Jane@freereminder’s last blog post..MEMO Movies
There are many that use outsourcing in the Real Estate business through a VA. This makes a lot of sense if you are too busy to do the mundane tasks. Having the extra time can lead to a more profitable business.
Well, it all depends on what your trying to outsource and what weightage you are placing on the outsourced stuff. I outsource a lot of my article writing stuff and till date, have been able to keep things relatively manageable
Computer Maintenance’s last blog post..Uninstall Unwanted Programs
Outsourcing is fine for large businesses.
But small businesses and even medium ones thrive because of the personal attention their customers pay extra for.
Have you guys even seen the quality of work deliviered by an outsourcing team? come on you must be kidding me!
I am not a racist but most of the IT outsourcing is based in India where most of them can’t even speak english properly and now they are allowed permanent residency if they live in UK for 5 years???
England is finished in the next decade – hiring scum paying £400 a day – makes me sick!