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.

If you outsource virtually everything, you can work from home, or anywhere else you choose.

Hire The Best

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?

Related Reading

The Pros And Cons Of Outsourcing Your Life
6 Ways To Make More Money With Less Time
10 Interview Tips To Avoid Hiring An Idiot

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16 Responses to “The Pros and Cons of Outsourcing”

  1. Nez on February 26th, 2008 4:14 am

    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

  2. cathlawson on February 26th, 2008 4:18 am
    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?

  3. sterling okura on February 26th, 2008 5:45 am

    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

  4. Harrison McLeod - Men with Pens on February 26th, 2008 5:47 am

    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

  5. Barbara on February 26th, 2008 7:33 am

    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

  6. cathlawson on February 26th, 2008 10:53 am

    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

  7. Hunter Nuttall on February 26th, 2008 2:22 pm

    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

  8. cathlawson on February 26th, 2008 4:43 pm

    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

  9. Tim on February 26th, 2008 5:00 pm

    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.

  10. cathlawson on February 26th, 2008 5:57 pm
    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.

  11. Ian Denny on February 26th, 2008 8:12 pm

    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

  12. cathlawson on February 26th, 2008 8:50 pm
    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.
  13. Nicole on February 27th, 2008 4:32 am

    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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  16. Michael on August 6th, 2008 2:07 pm

    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.


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