outsourcing advantages and disadvantages essay

Outsoursing Advantages and Disadvantages Essay

Advantages of outsourcing, disadvantages of outsourcing, reference list.

Outsourcing involves assigning some of the business tasks or a department to another business. This is done when a business cannot handle all of its activities internally. They can also do so in search for expertise of a specific task.

The businesses that are mostly involved in outsourcing include manufacturing, logistics, customer services, recruitment, web designing, information, content development and technology maintenance among others. The factors that influence decision making on outsourcing includes staff, finances, information characteristics, agreement issues, and vendor issues.

Out sourcing involves two businesses which come in to a contractual agreement to exchange services for payment. A business contacts another business to carry out a particular task and in return they pay for the services provided with. Business people do outsource in order to get time to do other significant roles. This saves time and can allow a business person to do other businesses thus increasing his profits. Due to a lot of work businessmen have during the day, many people have chosen outsourcing as the way to go.

This is less tiring and one can be able to attend to other things without abandoning the business. This ensures continuous smooth flow of the business (Nadeem, 2009). Outsourcing has its advantages and disadvantages. This paper will explore on the advantages and disadvantages of outsourcing.

Lower expenses

When outsourcing a businessman does not need to employ permanent employees; this saves on money that could be used to pay wages. The business person only would do outsourcing when there is really need to do so. This saves on money that could be used to pay employees. This increases business profits. One can then use such money to expand the business or invest somewhere else. Full time employees spend a lot of business money, which could be saved. Permanent employee normally has many expenses for they will have to enjoy full benefits like house allowances or medical allowances. The contracted person on the other hand only receives the payment agreed upon without other benefits. This can add up to the savings and maximization of profits. Other business people can chose to hire another vender outside their country and they end up paying less wages than they could have paid in their country. Also when outsourcing one does not need much office space and this cut down on the expenses that could be incurred in setting an office and buying of equipments (Nadeem 2009).

Time saving

When outsourcing a businessman gets time to be committed to other income generating activities. Time of production is greatly reduced as the vendor will focus on the task given to meet the requirements within the given time, For example, when hiring an external auditor in to your business.

The auditor would carry out the task faster than having a permanent auditor who will take all his time doing the same task. The business is able to focus on the core activities and outsourcing for activities they are not good at. This saves time that can be used for marketing the business and attending to loyal customers.

Flexibility when staffing

When outsourcing the management does not need to take a lot of time conducting interviews for they will go for the already established companies known to offer good services. The company can also opt to hire recruiting company to conduct interviews on their behalf and recommend the best suited candidates.

This is beneficial to the company for a lot of time will not be spent to screen an employee and they will also get good services from the out sourced experts for the task to be done. Outsourcing also allows the company to hire extra employees when they really need them and release them when the task is completed, for example, when an organization is conducting a research it could prefer hiring temporary research assistants to conduct the research within a specific time (Manning, Massini and Lewin, 2008).

Controlled operations

A business has many operations. Some of these operations spend a lot of money and a business cannot be able to control them. This operations need to be outsourced. Operations that have poor management and have grown with time should be outsourced to the people who are experts in that area.

For example, when a company needs to manage their website and market their business online they should opt to outsource these activities by hiring an information and technology company to be managing their website. This gives a company more time and space to deal with other operations that are able to carry out efficiently (Overby 2007).

Management of Risks and Stability

During a period when the business need more staff, it may experience some instability and this puts a business into risk. Outsourcing will save the company the risks that can be brought by inexperienced staff and this ensures the stability of the company for it will not be affected by substandard operations.

Outsourcing the operations to the experts ensures continuity of the business for it will continue offering services of high quality to its customers. For instance, when operations of production of a certain product arise and the company does not have expertise in the production of that product, out sourcing will give a company a perfect product that will satisfy customers thus ensuring business continuity. The business avoids the risks of producing a substandard product that will keep the customers away (Overby 2007).

Development of the Internal Employees

When a business does not have expertise in some areas that are important for the growth of the business, outsourcing of these activities would bring experts into the company. These experts can work along with the internal staff and they can gain expertise and experience from the outsourced workers. This assists in the development of internal staff. This is beneficial for a company will not need to outsource for the same activity again.

For example, a business may opt to outsource for external auditors who would work along with its accountants. With time the accountants will gain expertise in auditing and this will cut down on expense of outsourcing for the same operation in future. The management may also outsource for some experts from another company to come and train his staff for a specific period so as they can gain expertise and improve on their performance. This is important for continuous growth of a business (Nadeem 2009).

Outsourcing is known to be less expensive especially when it comes to staffing and company space but sometimes it can be very expensive. Sometimes working in house is cheaper than outsourcing. This is because some of the vendors are very expensive as they offer professional services and they claim they have much experience and that their services are perfect. There are hidden expenses that may arise in the process and the business is the one to care for them but not the contracted vendor.

When signing the contract agreement, the managerial pays for the agreed amount and any other expense like paying of the lawyer who will review the contract will be the business company and not the outsourcing company. These are the hidden legal fees. Outsourcing businesses are the ones who write the contract and so the business that wants the services will be disadvantaged when it comes to negotiations (Drezner 2004).

Poor Quality

The vendors are only interested in making profits. The vendor will provide the services but they will cut on their expense or production services as much as possible. This can lead to products or services of low quality. This creates problems to the company and it might end up losing customers because of the low quality products. In case the company want changes for the poor quality it will mean paying extra for the change for it was not in the contract agreement (Drezner 2004).

Loss of Confidentiality and Security

The information of the company success is always kept confidentially for it makes it keep running. If the outsourcing company gets hold of this company it may lead to disclosure to the competing companies. The company’s data may be at risk of being disclosed to other people thus risking the security of the company.

The outsourcing company will share information on products and knowledge of the company thus it can be easily disclosed. The manager should carry out a thorough investigation on the outsourcing company and they must include a clause on confidentiality and the penalty in case of disclosure of the company’s information (Engardio 2006).

Managerial Loss Control

It is not easy to manage the outsourcing company than to manage the in-house management. The outsourcing company gains control of the task or department they are assigned. They cannot conduct it with the mission and vision of the company; with this the company loses it management to the outsourcing company. The outsourcing company is driven by the profit they are going to make but not the vision and mission of the company (Norwood 2006).

Fixed On the Financial Well Being of another Company

When the company outsource its services or its departments to the outsourcing company it becomes tied up to the financial well being of the outsourcing company. If the outsourcing company becomes bankrupt the company is bound to fall too. Thus, it is important for a company to do thorough investigations on the stability of the outsourcing company. There is a risk of getting into a business that is not financially stable for it can become bankrupt any time (Gareiss 2002).

Lack of Focus on Customers

The outsourcing company is less interested on customers and they focus their interest on expertise and the profit they will get. This leads to loss of customers. The company is the one that suffers the consequences of outsourcing and this may worsen to a point of the business collapsing. The company should be careful when outsourcing not to lose their focus on customers for they are the ones that keep the business running. They should not prioritize on expertise at the expense of their customers (Engardio 2006).

Loss of Good Publicity

If the company gets rid of some workers at the expense of outsourcing the company loses publicity and the people in the community will think ill of the company. This leads to a company having a bad name in the society. Also outsourcing some of the activities in the business makes the workers loss morale of working in your company for they feel they are not secure on their job. This makes workers feel not satisfied and they may start looking for jobs somewhere else. The workers may resign when you least expect it (Gareiss 2002).

With the above advantages and disadvantages a businessman has to be very careful when making a decision to outsource some of the business activities. It is important for the business owner to evaluate the importance of the services that need to be outsourced to decide whether they really have to do so. To avoid business going down with the outsourcing company the business owner needs to do a feasibility study of the company he wants to work.

This includes investigating on the company’s financial stability to avoid going to losses when the outsourcing company becomes bankrupt. The businessman should also investigate on the quality of the services they offer. A businessman should consider outsourcing some of its activities in order to maximize the profits as much as possible. The advantages of outsourcing outweigh the disadvantages and thus outsourcing can be used wisely in order to maximize profit.

Drezner, D. 2004. The Outsourcing Bogeyman Web. Retrieved at: www.foreignaffairs.org .

Engardio, P, 2006. Outsourcing: Job Killer or Innovation Boost? Web. Web.

Gareiss, R, 2002. Analyzing the Outsourcers . New York, John Wiley & Sons.

Manning, S., Massini, S., and Lewin, A., 2008. A Dynamic Perspective on Next-Generation Off shoring: The Global Sourcing of Science and Engineering Talent, Academy of Management Perspectives Vol. 22, No. 3, pp. 35-54, 2008.

Nadeem, S, 2009. The Uses and Abuses of Time: Globalization and Time Arbitrage in India’s Outsourcing Industries. Global Networks Volume 9, Issue 1, pages 20–40, January 2009.

Norwood, J., Carson, C., Deese, M., Johnson, N. J., Reeder, F. S., Rolph, J. E. and Schwab, S., 2006. Off-shoring: An Elusive Phenomenon , National Academy of Public Administration, pp. 35-47.

Overby, S., 2007. ABC; an Introduction to Outsourcing . Cambridge, Cambridge University Press.

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21 Big Advantages and Disadvantages of Outsourcing

A business of any size can take advantage of the benefits of outsourcing because of how interconnected we are today through the Internet. The disadvantages of this practice can also make it so that a company ends up filing for bankruptcy prematurely due to the outcomes that were generated.

Whether you are in sales, marketing, or product development, there are a variety of unique benefits that are possible when you take the outsourcing approach. This relationship allows you to hand over specific tasks to someone outside of your organization without compromising the quality of the work being accomplished.

About 300,000 positions get outsourced every year in the United States, and the global market for this activity has a value that is approaching $100 billion. Almost 60% of companies use this practice as a way to reduce their expenses.

Although the government and defense sectors are the largest suppliers of opportunities in this area, it is still advantageous for anyone with a business to consider the advantages and disadvantages of outsourcing right now.

List of the Advantages of Outsourcing

1. Outsourcing provides you with an opportunity to gain immediate expertise. The most significant advantage that a business can gain by approaching the outsourcing process is an increase in expertise access. Your C-Suite and core team members are fantastic in their areas of education and experience, but it is impossible to be an expert at everything. Instead of trying to force a square peg into a round hole, outsourcing gives a business the opportunity to improve their overall performance by drawing on the specific skills of other experts in various industries.

Although outsourcing is often debated because of the number of jobs that get sent to foreign countries, companies can also look for freelancers at home who can provide this necessary expertise.

2. Projects can get completed faster through the outsourcing process. Small business owners often look to the processes of outsourcing as a way to complete work because the tasks can get finished sooner. When your company has a limited number of employees, then there are only so many hours in the day when your group of people can be productive. If you partner with other agencies or freelancers to complete these tasks, then a project can get done a lot faster.

You can take advantage of the time zone differences around the world to outsource time-consuming tasks to external agencies. It creates a scenario where your business can become productive around the clock.

3. Outsourcing allows your company to focus on what matters. An enhanced level of freedom becomes available when companies begin to work with external agencies or freelancers. When you pass along projects or tasks that consume a significant portion of your time, then you can return to your strengths and skills. That means your leadership team can work on enhancing internal core processes to ensure that your agency remains healthy over time.

4. Companies can share some risk factors through the outsourcing process. Risk assessment and analysis is an integral component of any project planning experience. If your company is going to tackle a project by itself, then all of the rest sits in your lap. The outsourcing process allows you to take specific campaigns or processes to industry experts in their respective fields. It is an advantage that allows you to benefit from those enhanced abilities to mitigate the potential problems that can develop while working.

Outsourcing does have a unique set of risks that must be managed through the contract, but it is possible to reduce problems in this area by taking a proactive look at all of the terms and conditions that govern these relationships.

5. You can save money when you can outsource specific tasks. Companies can save a significant amount of money when they outsource specific tasks to partner agencies or individual freelancers. Five specific areas of focus with this advantage can help to make these relationships start to pay off almost immediately.

• The average business spends over $1,200 to train each worker during their first days of employment. Outsourcing can reduce the cost by 50%.
• When you work with freelancers or outside agencies, then you don’t have to pay the cost of benefits in addition to the salary responsibilities.
• Employee opportunity costs are lower because you aren’t paying people to clean their desks, perform data entry, or complete other mundane tasks.
• Tech support functions can save a significant amount in labor costs.
• Telecommuting gives a business several ways to reduce overhead expenses without disrupting productivity.

6. Outsourcing allows an agency to stay productive 24/7. Companies that embrace the art of outsourcing can enhance their productivity levels immediately with these relationships. Multiple time zones from around the world make it possible for a business to stay productive all day, every day. Although this benefit requires strategic thinking and a little luck when finding the needed expertise in each location, the logistics of accomplishing this task is worth the work that it takes.

When you get this advantage of outsourcing right, then it effectively means that your business continues to operate even when you are asleep, taking a vacation, or running errands with your family.

7. It simplifies project management approaches. You can choose from a variety of specialist freelance websites or online services to begin the outsourcing process as a small business owner. You will find that several dynamic platforms offer intuitive approaches that can take your productivity levels to the next level. This benefit helps you to effectively manage what is being done, when it is due for review, and how it will get paid. Many of these processes can benefit from automation.

New algorithms that embrace concepts from artificial intelligence and machine learning can simplify this process even more by automatically matching specific tasks to providers. That means even more of your time gets freed up so that you can focus on other essential tasks.

8. You can start the process of simplifying work relationships. Have you ever heard someone say that it is never a good idea to work with family or friends? Although most small business teams involve family operations or are part of a tight-knit group of long-term friends and this can be a good thing, it can also lead to problems when the work isn’t being done up to a specific standard. When you outsource the tasks, then you can minimize whatever personal relationship issues develop in a professional environment because you are managing simple contracts.

This benefit doesn’t mean that you can remove all personal conflicts from the workplace. It does give you an opportunity to salvage relationships when a professional standard might not be present.

9. Outsourcing allows you to target specific processes or efforts. The process of outsourcing allows companies of any size to execute targeted campaigns or projects that they would otherwise be unable to manage. You can access expertise from any geographic location or industry background because of these processes. It is a benefit that gives your company the chance to explore new risks, target additional markets, or experiment with unique approaches.

It is almost impossible for a company to grow today without the desire to take on at least some level of risk. Although it is beneficial to stay in a comfort zone for a little while when profits are coming in, outsourcing creates a safety net where new ideas can get tried without putting everything at risk.

10. Your company can have higher peace of mind. Outsourcing can seem like a scary situation when you first approach this idea. If you choose a reliable freelancer or external agency with a reputation of success, then you can have the peace of mind in knowing that the tasks are being handled appropriately. Your company gets to take advantage of outside expertise while barely lifting a finger to accomplish specific tasks or goals.

Although you can always find bad actors and false reviews out there that can put some agencies in a bit of trouble, the same risk applies to the hiring process when you bring in new workers.

11. Outsourcing can apply to almost any leadership level in an organization. IT positions are usually the first ones to be considered for outsourcing because of the significant differences in salary expectations. An entry-level employee in the United States might earn $40,000 per year, while someone in China with more expertise earns about $7,000 annually. Companies can go to India to pay someone $8,400. Some Silicon Valley agencies are reportedly even offering temporary work visas as part of the payment package.

High-level leadership tends to be the most expensive area of salary expense that companies manage. You need to pay people to bring their experience to your agency. Outsourcing changes that dynamic because you can now take advantage of the global perspective when approaching the need for C-Suite assistance.

List of the Disadvantages of Outsourcing

1. Companies lose some control over their work processes with outsourcing. When a business decides that outsourcing is the correct approach to use for a project or a specific need, then there is some control lost over the processes involved. When you form a relationship with an external agency or a freelancer, then you don’t have as much control over how tasks are completed and monitored. That is why it is essential for a relationship to form because it is imperative for you to know and trust the company or people you’ve brought on through the outsourcing process.

2. Outsourcing always has hidden costs to consider. The practice of outsourcing is popular because it offers a way to complete specific tasks for a lower labor cost. What many businesses discover after getting into this relationship is that there could be several hidden costs that are unaccounted for during the initial setup phases of this relationship. You must read the terms and conditions of any contracts thoroughly before agreeing to anything. Outsourcing agencies typically ask freelancers and small business owners to sign lengthy agreements with a significant amount of fine print. If you aren’t reviewing those terms carefully, then unexpected costs could be coming your way.

3. Security risks exist in even the best outsourcing relationships. Businesses must always exercise caution when using customer-related data in this current era of information protection. If you plan to outsource processes or procedures that require the sharing of personal info, then you could be placing the privacy of others at risk in your effort to find a simpler solution. This disadvantage can also apply to the intellectual property that your company currently owns.

New laws are requiring businesses to take extraordinary measures to prevent data loss. When you create new pathways for information sharing, then there are more opportunities for hackers to get their hands on this critical asset.

4. Outsourcing can reduce quality control measures. It is not unusual to see outsourcing companies, and some freelancers, motivated more by their profit margin than an ability to complete projects to the best of their ability. This disadvantage is often seen when you receive work back quickly. It might meet your deadlines and get the basics right, but the project may also not conform to the standards or quality that your customers have come to expect when working with your brand.

Outsourcing requires you to trust the people you hired to complete these tasks. Make sure that your contract allows for a revision of the work you receive to add a layer of protection against this particular disadvantage.

5. You are sharing your financial wellbeing with another company. Outsourcing requires a company to trust the financial status of their partner when they begin this cooperative relationship. If the freelancer or agency goes out of business in the middle of a contract, then it can leave you in an uncomfortable position. Make sure that you spell out all of the terms and conditions in plain language regarding what an outcome will be if the outsourcing agency goes out of business in the middle of your project. You don’t want to be stuck in the position of taking a financial hit should they fail to deliver on their promises.

6. Outsourcing can be a PR nightmare for some agencies. When you take your work overseas through outsourcing, then it is possible for your company to receive a significant level of domestic backlash. Every job that gets completed through this process is an employment opportunity taken away from someone in the local community. This disadvantage means that you can run into adverse feelings regarding your decisions from your consumer base. Some people have taken a moral stance against outsourcing behaviors.

You will also find that criticism will come your way if your products or services are priced too high because you are using local labor. For better or for worse, there will always be criticism. It is up to you to determine what the right course of action is to take for your company.

7. You might have timing issues develop in an outsourcing relationship. When you outsource a specific task to an outsourcing agency or freelancer, then you need to create synchronicity with your timing expectations. Your partners could very well be marching to the beat of a different timing drum. Trying to get your schedules to match up so that customers can receive what was promised to them on a reliable timeline can sometimes feel like an impossible task to complete.

One of the reasons for this disadvantage is the timing differences that exist in different cultures around the world. The United States experiences this issue when a company from the East Coast hires a freelancer who lives on the West Coast. The three hours of difference between the two time zones can create a scheduling headache at the beginning or the ending of the working day.

8. Outsourcing can cause your company to start losing its focus. When a company begins to outsource multiple projects to varying agencies and freelancers, then the individuals involved in monitoring this work maybe putting in more hours to verify the quality of what they receive then if they did the work by themselves. Most outsourcing agencies tend to service multiple clients at the same time, which also means that your work may not always receive the focus that you believe it deserves. There are times when this lack of focus on both sides of the aisle can be extremely detrimental to the health of your business.

9. Things get lost in translation when you work with other people and agencies. Essential instructions often get lost in translation when you start communicating with remote workers and agencies by telephone or email. Even if you attempt to avoid this disadvantage by having an in-person meeting or a video conference call, people can interpret different words and phrases and unique and unexpected ways.

It is imperative for any company that pursues outsourcing to verify that every instruction given is heard or understood so that everyone is on the same page. When miscommunication happens, it can cost all parties a serious amount of money, time, and stress.

10. Outsourcing can create moral dilemmas for some agencies. The United States has one of the most valuable economies in the world today. That means the standard of living is quite high. When a company considers outsourcing to a firm in Asia, then this fact changes. Lower salary costs might support a living wage on the other side of the Pacific. Paying someone less than $2 per hour for something that you’d pay someone $20 per hour to complete at home can force some executives into a unique conundrum.

Then there is the reality of internal growth. When you begin to expand domestic operations, then you start to build new opportunities for your agency. Sending jobs to an outsourcing agency will help that firm grow more instead of your own.

Most industries use outsourcing to find the best talent possible for every project or circumstance. Although information technology and marketing tend to lead the way in this area, you will find numerous opportunities in payroll management, human resources, manufacturing, and government needs.

Some of the largest companies in the world, including Apple and Walmart, use outsourcing processes to improve the quality of their work and their overall efficiency levels. Small businesses use freelancers through websites like Fiverr for the same reasons.

When is it time to consider the advantages and disadvantages of outsourcing? For most agencies, it is when there is a need to cut labor expenses. Some executives feel that this approach helps them focus on their core business. It can also be a way to resolve capacity problems that develop. The bottom line is this: if you don’t have the talent or time to complete a specific task right now, then partnering with someone who can is a decision that makes a lot of sense.

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The pros and cons of outsourcing.

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Have you been mulling over the idea of outsourcing one or more tasks or employment opportunities? From product development to sales and marketing, there are a variety of benefits of taking this approach.

With outsourcing growth expected in the years to come, there may never be a better time to learn more about this topic. Before you move forward, it’s imperative to compare the pros and cons of outsourcing. And it's also very important to understand the effect outsourcing can have on company culture.

Advantages Of Outsourcing

Knowing the benefits of outsourcing will help you decide if this is something that could work for your business. Here are three reasons to give this a try:

1. You Don’t Have To Hire More Employees

When you outsource, you can pay your help as a contractor. This allows you to avoid bringing an employee into the company, which saves you money on everything from benefits to training.

2. Access To A Larger Talent Pool

When hiring an employee, you may only have access to a small, local talent pool. This often means you have to compromise. Many companies have found that outsourcing gives them access to talent in other parts of the world. If you need specialized help, it often makes sense to expand your search.

3. Lower Labor Cost

Did you know there are approximately 300,000 jobs outsourced by the United States each year?

Every company has its own reason for doing this, with many chasing lower labor costs. You don’t want to trade quality for price, but outsourcing often allows you to get the best of both worlds. By searching a global talent pool, it’s easier to find the right talent at the right price.

Cons Of Outsourcing

Despite the many benefits of outsourcing, you don’t want to go down this path until you compare these to the potential drawbacks:

1. Lack Of Control

Although you can provide direction in regard to what you need to accomplish, you give up some control when you outsource.

There are many reasons for this, including the fact that you are often hiring a contractor instead of an employee. And since the person is not working on-site, it can be difficult to maintain the level of control you desire.

2. Communication Issues

This doesn’t always come into play, but it’s one of the biggest potential drawbacks. Here are several questions to ask:

• What time zone does the person live in and how does this match up with your business hours?

• What is your preferred method of communication? Phone, email, instant messaging?

• Does the person have access to a reliable internet connection?

According to Cameron Herold , the founder of a COO training program, communication is essential to success in the business world. Since a large number of U.S.-based employees report not being engaged at work , communication remains a major problem. Will this get worse if you outsource?

3. Problems With Quality

Despite all the benefits of outsourcing, it is only a good thing if you’re receiving the quality you expect. Anything less than this will be a disappointment.

This isn’t to say you can’t successfully outsource particular tasks, but you need to discuss the expected quality upfront.

Impact On Company Culture

As a business owner, it’s easy to focus on the benefits of outsourcing, all without considering the impact it can have on your company as a whole. If you plan on outsourcing, you need to take steps to ensure that it doesn’t have a negative effect on company culture.

A positive work culture leads to a higher level of productivity, so you don’t want to do anything to jeopardize this. Some of the ways outsourcing can negatively affect company culture include:

• Upset employees as they may feel they are being replaced

• Confuse employees who don’t understand why you are outsourcing particular tasks

• Add challenges to the daily workflow of the company

Outsourcing doesn’t always have a negative impact on company culture, but you need to protect against this before you ever take a step in this direction. This typically means discussing your decision with any employees who could be impacted.

There are many pros and cons of outsourcing, all of which you should carefully consider before deciding for or against this strategy. With the ability to affect company culture, this isn’t something to take lightly. Do you have any experience with outsourcing? Did it benefit your company, or result in more harm than good?

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What is outsourcing? Definitions, benefits, challenges, processes, advice

Outsourcing can bring big benefits, but risks and challenges abound when negotiating and managing outsourcing relationships. here’s what you need to know to ensure your it outsourcing initiatives succeed..

Outsourcing definition

Outsourcing is a business practice in which services or job functions are hired out to a third party on a contract or ongoing basis. In IT, an outsourcing initiative with a technology provider can involve a range of operations, from the entirety of the IT function to discrete, easily defined components, such as disaster recovery, network services, software development, or QA testing.

Companies may choose to outsource services onshore (within their own country), nearshore (to a neighboring country or one in the same time zone), or offshore (to a more distant country). Nearshore and offshore outsourcing have traditionally been pursued to save costs.

Outsourcing services

Business process outsourcing (BPO) is an overarching term for the outsourcing of a specific business process task, such as payroll. BPO is often divided into two categories: back-office BPO, which includes internal business functions such as billing or purchasing, and front-office BPO, which includes customer-related services such as marketing or tech support.

IT outsourcing is a subset of business process outsourcing, and it falls traditionally into one of two categories: infrastructure outsourcing and application outsourcing. Infrastructure outsourcing can include service desk capabilities, data center outsourcing, network services, managed security operations, or overall infrastructure management. Application outsourcing may include new application development, legacy system maintenance, testing and QA services, and packaged software implementation and management.

Today, however, IT outsourcing can also include relationships with providers of software-, infrastructure-, and platforms-as-a-service. These cloud services are increasingly offered not only by traditional outsourcing providers but by global and niche software vendors or even industrial companies offering technology-enabled services.

For more on the latest trends in outsourcing, see “ 7 hot IT outsourcing trends — and 7 going cold .”

Outsourcing pros and cons

The business case for outsourcing varies by situation, but the benefits and risks of outsourcing often include the following:

IT outsourcing models and pricing

The appropriate model for an IT service is determined by the service provided. Most outsourcing contracts have been billed on a time and materials or fixed price basis. But as outsourcing services have matured to include strategic transformation and innovation initiatives , contractual approaches have evolved to include managed services and outcome-based arrangements.

The most common ways to structure an outsourcing engagement include:

Outsourcing vs. offshoring

The term outsourcing is often used interchangeably — and incorrectly — with offshoring, usually by those in a heated debate. But offshoring is a subset of outsourcing wherein a company outsources services to a third party in a country other than the one in which the client company is based, typically to take advantage of lower labor costs. This subject continues to be charged politically because offshore outsourcing is more likely to result in layoffs.

Outsourcing of jobs

Estimates of jobs displaced or jobs created due to offshoring tend to vary widely due to lack of reliable data. In some cases, global companies set up their own captive offshore IT service centers to reduce costs or access skills. Some roles typically offshored include software development, application support and management, maintenance, testing, help desk/technical support, database development or management, and infrastructure support.

In recent years, IT service providers increased investments in IT delivery centers in the US, according to a report from Everest Group. Offshore outsourcing providers have also increased their hiring of US IT professionals to gird against potential increased restrictions on the H-1B visas they use to bring offshore workers to the US to work on client sites.

Some industry experts point out that increased automation and robotic capabilities may actually eliminate more IT jobs than offshore outsourcing.

Outsourcing risks and challenges

The failure rate of outsourcing relationships remains high, ranging from 40% to 70%. At the heart of the problem is the inherent conflict of interest in any outsourcing arrangement. The client seeks better service, often at lower costs, than it would get doing the work itself. The vendor, however, wants to make a profit. That tension must be managed closely to ensure a successful outcome for both client and vendor. A service level agreement (SLA) is one lever for navigating this conflict — when implemented correctly . An SLA is a contract between an IT services provider and a customer that specifies, usually in measurable terms, what services the vendor will furnish. Service levels are determined at the beginning of any outsourcing relationship and are used to measure and monitor a supplier’s performance.

For more on outsourcing contracts, see “ 11 keys to a successful outsourcing relationship ” and “ 7 tips for managing an IT outsourcing contract .”

Another cause of outsourcing failure is the rush to outsource as a “quick fix” cost-cutting maneuver rather than an investment designed to enhance capabilities, expand globally, increase agility and profitability, or bolster competitive advantage.

Generally speaking, risks increase as the boundaries between client and vendor responsibilities blur and the scope of responsibilities expands. Whatever the type of outsourcing, the relationship will succeed only if both the vendor and the client achieve expected benefits.

See also: “ 9 IT outsourcing mistakes to avoid ” and “ 10 early warning signs of IT outsourcing disaster .”

Types of outsourcing

Many years ago, the multi-billion-dollar megadeal for one vendor hit an all-time high, but wholesale outsourcing proved difficult to manage for many companies. These days, CIOs have embraced the multi-vendor approach , incorporating services from several best-of-breed vendors.

Multisourcing, however, is not without challenges. The customer must have mature governance and vendor management practices in place. In contract negotiations, CIOs need to spell out that vendors must cooperate or else risk losing the job. CIOs need to find qualified staff with financial as well as technical skills to help run a project management office or some other body that can manage the outsourcing portfolio.

The rise of digital transformation has initiated a shift away from siloed IT services. As companies embrace new development methodologies and infrastructure choices, many standalone IT service areas no longer make sense. Some IT service providers seek to become one-stop shops for clients through brokerage services or partnership agreements, offering clients a full spectrum of services from best-in-class providers.

How to select a service provider

Selecting a service provider is a difficult decision, and no one outsourcer will be an exact fit for your needs. Trade-offs will be necessary.

To make an informed decision, articulate what you want from the outsourcing relationship to extract the most important criteria you seek. It’s important to figure this out before soliciting outsourcers, as they will come in with their own ideas of what’s best for your organization, based largely on their own capabilities and strengths.

Some examples of the questions you’ll need to consider include:

• What’s more important to you: the total amount of savings an outsourcer can provide you or how quickly they can cut your costs?
• Do you want broad capabilities or expertise in a specific area?
• Do you want low, fixed costs or more variable price options?

Once you define and prioritize your needs, you’ll be better able to decide what trade-offs are worth making.

Outsourcing advisers

Many organizations bring in a sourcing consultant to help establish requirements and priorities. Third-party expertise can help, but it’s important to research the adviser well. Some consultants may have a vested interested in getting you to pursue outsourcing rather than helping you figure out if outsourcing is a good option for your business. A good adviser can help an inexperienced buyer through the vendor-selection process, aiding them in steps like conducting due diligence, choosing providers to participate in the RFP process, creating a model or scoring system for evaluating responses, and making the final decision.

For more advice, see “ Outsourcing advisors: 6 tips for selecting the right one .”

Negotiating the best outsourcing deal

Balancing the risks and benefits for both parties is the goal of the negotiation process , which can get emotional and even contentious. But smart buyers will take the lead in negotiations , prioritizing issues that are important to them, rather than being led around by the outsourcer.

Creating a timeline and completion date for negotiations will help rein in the process. Without one, discussions could go on forever. But if an issue needs time, don’t be a slave to the date.

Finally, don’t take any steps toward transitioning the work to the outsourcer while in negotiations. An outsourcing contract is never a done deal until you sign on the dotted line, and if you begin moving the work to the outsourcer, you will be handing over more power over the negotiating process to them as well.

Outsourcing’s hidden costs

Depending on what is outsourced and to whom, studies show that an organization will end up spending at least 10% percent above the agreed-upon figure to manage the deal over the long haul. Among the most significant additional expenses associated with outsourcing are:

• the cost of benchmarking and analysis to determine whether outsourcing is the right choice
• the cost of investigating and selecting a vendor
• the cost of transitioning work and knowledge to the outsourcer
• costs resulting from possible layoffs and their associated HR issues
• costs of ongoing staffing and management of the outsourcing relationship

It’s important to consider these hidden costs when making a business case for outsourcing.

The outsourcing transition

Vantage Partners once called the outsourcing transition period — during which the provider’s delivery team gets up to speed on your business, existing capabilities and processes, expectations and organizational culture — the “valley of despair.” During this period, the new team is trying to integrate transferred employees and assets, begin the process of driving out costs and inefficiencies, while still keeping the lights on. Throughout this period, which can range from several months to a couple of years, productivity very often takes a nosedive.

The problem is, this is also the time when executives on the client side look most avidly for the deal’s promised gains; business unit heads and line managers wonder why IT service levels aren’t improving; and IT workers wonder what their place is in this new mixed-source environment. The best advice is to anticipate that the transition period will be trying, attempt to manage the business side’s expectations, and set up management plans and governance tools to get the organization over the hump.

Outsourcing governance

A highly collaborative relationship based on effective contract management and trust can add value to an outsourcing relationship. An acrimonious relationship, however, can detract significantly from the value of the arrangement, the positives degraded by the greater need for monitoring and auditing. In that environment, conflicts frequently escalate and projects don’t get done.

Successful outsourcing is about relationships as much as it is actual IT services or transactions. As a result, outsourcing governance is the single most important factor in determining the success of an outsourcing deal. Without it, carefully negotiated and documented rights in an outsourcing contract run the risk of not being enforced, and the relationship that develops may look nothing like what you envisioned.

For more on outsourcing governance, see “ 7 tips for managing an IT outsourcing contract .”

Repatriating IT

Repatriating or backsourcing IT work (bringing an outsourced service back in-house ) when an outsourcing arrangement is not working — either because there was no good business case for it in the first place or because the business environment changed — is always an option. However, it is not always easy to extricate yourself from an outsourcing relationship, and for that reason many clients dissatisfied with outsourcing results renegotiate and reorganize their contracts and relationships rather than attempt to return to the pre-outsourced state. But, in some cases, bringing IT back in house is the best option, and in those cases it must be handled with care .

For more on repatriating IT, see “ How to bring outsourced services back in-house .”

More on outsourcing:

• 7 hot IT outsourcing trends — and 7 going cold
• Top 10 IT outsourcing providers
• 9 outsourcing myths debunked
• The hidden costs of outsourcing
• 11 keys to a successful outsourcing relationship
• 9 IT outsourcing mistakes to avoid
• 10 early warning signs of IT outsourcing disaster
• 12 signs your strategic partnership has gone wrong
• 7 keys to transformational outsourcing success
• SLA guide: Best practices for service-level agreements
• 10 dos and don’ts for crafting more effective SLAs
• How to contract for outsourcing agile development

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Home — Essay Samples — Business — Outsourcing — Advantages and Disadvantages of Outsourcing for a Business

Advantages and Disadvantages of Outsourcing for a Business

• Categories: Company Outsourcing

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Published: Mar 1, 2019

Words: 997 | Pages: 2 | 5 min read

Table of contents

Introduction, advantages of outsourcing, disadvantages of outsourcing.

• Dibbern, J., Goles, T., Hirschheim, R., & Jayatilaka, B. (2004). Information systems outsourcing: A survey and analysis of the literature. The DATA BASE for Advances in Information Systems, 35(4), 6-102.
• Domberger, S., Fernandez, P., & Li, C. K. (1998). The impact of outsourcing and high-technology capital on business performance: A firm-level analysis. Journal of Economic Behavior & Organization, 35(3), 331-361.
• Lacity, M. C., & Willcocks, L. P. (2001). Global outsourcing of back office services: Lessons, trends, and enduring challenges. Strategic Outsourcing: An International Journal, 1(2), 191-201.
• Kakabadse, A., Kakabadse, N., & Kouzmin, A. (2003). From in-house to out-house: The dissemination of HR activities in the US. Journal of World Business, 38(2), 121-132.
• Raghuram, S., Garud, R., & Wiesenfeld, B. (2003). Capturing the complexity in advanced technology use: Adaptive structuration theory. Organization Science, 14(5), 542-555.
• Lee, J. N., Huynh, M. Q., & Kwok, R. C. (2002). The strategic value of IT outsourcing: An empirical investigation. Information & Management, 39(7), 625-635.
• Mann, A., & Borgaonkar, A. (2017). Outsourcing: A literature review. International Journal of Management and Commerce, 5(2), 19-31.

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Advantages and Disadvantages of Human Resource Outsourcing

Introduction, human resource, management, and outsourcing, reasons for human resource outsourcing, reasons against human resource outsourcing, activities to outsource, reference list.

Several companies and organizations in the world have resorted to outsourcing for Human resources. This has drawn great interest in its effect on the productivity of the various companies. Of significance however is the fact that more companies are shifting to outsourcing, despite having various personnel to manages the human resource department. Interestingly, numerous vendors have since sprung up to offer Human resource outsourcing; this indicates that the shift is fast changing. This paper (1660 words) attempts to investigate the need for, or against human resource outsourcing as well as try to find out the activities that are likely to be outsourced by multinational companies.

Human resource is used in organisations to refer to the function within an organisation that deals with the implementation of the policies, and approaches relating to the administration of individuals, it also refers to the overall workforce; the individuals that make up the workforce in an organisation (Grover, 2006, par.1). Human resources refer to the workforce potential of an organisation and give the capacity of the individuals.

Different organisations evaluate their human resource potential to improve productivity. Human resource management is defined as the function within an organisation responsible for recruitment and management of the individuals or workforce (McLean, 2006, par.3). It also deals with the development and training of the employees (Heathfield, 2010, par. 1). Outsourcing services involves contracting an organisation’s activities to another provider; Human resource outsourcing is always done by major companies especially when it involves offshore recruitment. These multinational companies consider the number of resources and time they can save by contracting (Overby, 2010, par.2).

Many companies do human resource outsourcing for various reasons and this depends on the activities of the companies. However, in most cases, there is a common stand on some of these reasons. The reasons for Human resource outsourcing may include: to lower cost of hiring (Engardio, Arndt & Foust, 2006, par. 2 ); because of the complexities involved in the hiring of potential employees, economies of scale play a major part in this and outsourcing is vital to control the labour rates which relieves the company of the unnecessary costs that could be incurred in the process.

Inadequate in-house resources for conducting the hiring may also be a reason; for companies with complete specializations, they may not have the resources required to recruit; it, therefore, follows that outsourcing will be undertaken, outsourcing for human resources helps the companies control their budgets, and this is possible since they can predict the cost of outsourcing and plan for the future.

Outsourcing also saves time, and this time can be put on productivity hence more returns. It lowers the amount of investment used for internal infrastructure; every company has different activities in its budget, these budgets are sometimes tedious and straining to accomplish, outsourcing human resources would help in efficiency since the activities left are manageable.

Human resource outsourcing helps the organisation involved to improve on their human resource management and development of skills; this is because, during the process of recruiting, the company can access skills and resources from the outsourcing company. Outsourced workforce tends to be more effective and efficient in their activities of production, this gives an edge to the company as higher quality production is achieved.

The integration of the modern world has forced businesses to locate globally; this has caused a stretch to the multinational firms, posing them complex challenges on how to embed the different skills, practices and cultures of their potential employees. It is only imperative that they outsource for them since the specialized employment agencies would have a better understanding when dealing with different groups of people (Lam, Gold & Moore, 2008, pp.1).

The fact that the world is turning global to every multinational company with time due to the advancement in technology, communications and economies clearly explain the cross-boundary that takes place within the businesses, this has exposed diversity in skills required for each area thereby leading to complexities. It calls for an equally complex human resource management that can handle the variations, and can no longer be done fully without the help of the outsourcing agency; otherwise, it would be too involving and may not achieve the desired results (Brewster, Sparrow & Vernon, 2007, pp. 3).

Other reasons for outsourcing are: outsourcings has done for the company to focus on its core activities, to access intellectual gain from the outsourcing company, for contract purposes which are legally binding as opposed to the internal Human resource recruitment (Rothman, 2003, par. 2), an operational specialization which may not be in the organisation. Outsourcing exposes the team to a pool of potential employees (Manning et al. 2008, par. 1).

It also enhances the capacity of the company where they lack the adequate capacity for human resources (Lewin & Couto, 2006, par.4). It can be used as a channel for change since the outsourcing agency can be a sign of the change (Lewin & Couto, 2006, par. 1). The risk is transferred to the outsourcer and thus improves the capacity development of the organisation (Engardio & Kripalani, 2006, par. 3). These among others are clear advantages for Human resource outsourcing for the better management and enhancement of the workforce capacity (Couto et al. 2007pp. 35-37).

As much as Human outsourcing may be relevant, various negative aspects would make it undesirable to organisations. It is outright that a company that relies on outsourcing will have little credit for Human resource management skills. Human resource managers who outsource would less likely get promoted compared to those with equal workforce capacity but does not outsource, this is because the former is never credited with the success but the outsourcing agency (Sullivan, 2003, par. 1).

Generally, outsourcing can hurt the competitive advantage and productivity level of an organisation, because outsourcing depends on outsourcers who in turn depend on vendors. The economic model of corporate businesses is aimed at becoming the best firm with more superior employees than its competitors; this value is undone by outsourcing since the economic model of the vendors allows them to directly provide similar services to other competitors. Others may even develop solutions at the company’s expense then sell them to its competitors, this makes outsourcing unreliable in providing a competitive advantage to the firm.

Human resource also limits the development of the human resource department of the company; the department should be let to develop its staff as this improves the capacity. There is a general thought that outsourcing is cost-effective, but this is rarely realized, and on very few occasions are proofs given for the amount saved, besides the vendors must make profit out of the service, this beats the logic of cost-effectiveness, Outsourcing may then be even more expensive to handle.

Company secrets are vital for its continued success; when outsourcing, company secrets may be compromised and this may negate the company’s image or provide a competitive advantage to its competitors. Other reasons against outsourcing are unstable pricing by the vendors, it eliminates the internal staff and leaves the business at the mercy of the vendor. The company culture may also be too complex for the vendors to understand (Sullivan, 2003, par. 2-17).

Activities in Human resource management are numerous, they include, Staffing, rewards, employee development, employee maintenance, and employee relations. Given the size of the business, it would be advisable for the team of a multinational company to outsource the following activities: staffing; during the initial recruitment, the company would rather outsource as there would be access to a large pool of employees to select.

Also, they would most likely be from different parts of the world and would be easier to access than in their respective company centres (McNamara, 2010, par. 1). Another activity that may be outsourced are the rewards, this would be good for the external evaluators and will be more impartial in their decisions as they have no direct contact with the employees (Bratton & Gold,1999, pp.14-15).

In dealing with Human resource outsourcing, the organisation must consider, it’s, size which must be big, to have the financial advantage on outsourcing, the kind of business is also very important; very complex companies would be difficult for the vendors to understand, it is, therefore, wise to outsource those activities that are manageable to achieve the expected outcomes.

It is better to use the best of breed approach which involves outsourcing from different vendors, this helps in improving the quality of service as the vendors compete to improve on their services. For better outcomes, the company must also make an informed choice of the vendors by researching them. At this point, the company must prioritise its needs to find the best vendor that fits its requirements.

Human resource outsourcing is vital for multinational companies to embed the different cultural, cross-national, expertise and access the best of the best in a large pool of employees. Time is saved for the company and it can focus on its other responsibilities to improve its productivity.

On the other hand, outsourcing is very complex, it is workable but has its limits, Credit is most likely taken by the vendors and the internal human resource management is limited, this also affects the growth and expansion of the department. Vendors may also cut costs when they start services to lure the company but later revise their prices upwards, causing instability to the company’s financial base.

Human resource management is highly applicable for multinational companies. It is difficult in complex businesses where the vendors may not understand the risks involved. An efficiently managed Human resource outsourcing gives the company a competitive advantage hence maximized returns. However, caution should be when outsourcing to mitigate overuse.

Bratton J., Gold J. 1999.  Human Resource Management: Theory and Practice . Web.

Brewster C., Sparrow P., Vernon G. 2007. International Human Resource Management . CIPD. Web.

Couto V. et al. 2007. Offshoring 2.0:Contracting Knowledge and Innovation to Expand Global Capabilities . Offshoring Research Network. Service provider Report. Web.

Engardio P. & Arndt M. & Foust D. 2006. The Future Outsourcing . Business Week. Web.

Engardio P. & Kripalani M. 2006. The Rise of India . Business Week. Web.

Grover,L.,L.. 2006. Advances in Developing Human Resources. Vol. 8, No. 3. Web.

Heathfield,S, M. 2010. What Is Human Resource Management? About. Guide. Web.

Lam A., Gold M., Moore F. 2008. Mn327 International human resource management 2008/09 . Web.

Lewin A. Y. & Couto V. 2006. Next Generation Offshoring: The Globalization of Innovation. Survey Report . Offshoring Research Network. Web.

Manning et al. 2008. A Dynamic Perspective on Next-Generation Offshoring: The Global Sourcing of Science and Engineering Talent . Academy of Management Perspectives. Web.

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McNamara C. 2010. Human Resource Management . Authenticity Consulting,LLC. Web.

Overby S. 2010. Outsourcing Definition and Solutions. CXO Media Inc. Web.

Rothman J. 2003. 11 Steps to Successful Outsourcing: A Contrarian’s View . Computer world. Web.

Sullivan J. 2003. The Case Against Outsourcing Human Resource . Dr. John Sullivan’s. Web.

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Outsourcing: Advantages and Disadvantages

Published Date: 28 Nov 2017

Disclaimer: This essay has been written and submitted by students and is not an example of our work. Please click this link to view samples of our professional work witten by our professional essay writers . Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of EssayCompany.

With the rapid rise of globalization, the challenge of global outsourcing today is not "Why outsource and what?" But "How to outsource?" Today's theme is "Let's get it right the first time." Barriers to outsourcing companies are own mentalities, local regulations and the robustness of their internal processes. Domain knowledge in many industries has gone totally global.

Sri Lanka is becoming a global IT-BPO destination of choice in several key areas of focus domain. Sri Lanka ranked among the top 20 global destinations in outsourcing / BPO consulting giant AT Kearney

The growth of the IT-BPO industry in Colombo offers a unique advantage for Small and Medium Enterprises (SME) to enjoy premium access to a talent pool of high quality, which is becoming increasingly difficult in large established destinations such as India and China. The environment is also very suitable for the establishment of competence centers niche in high demand for companies competing largest global services.

Sri Lanka can not be at the top of the countries involved in outsourcing of business processes, but it is increasingly preferred. Having learned from India's success in this area is slowly opening up to many foreign companies that are opening operations in this country. Business Process Outsourcing in Sri Lanka has been aided by the fact that the country has opened a sales outsourcing partnership aimed at helping it to become a reference center for this business.

Business Outsourcing has been an important source of income for China and India for a long period of time, but the clock is fast becoming the business of Sri Lanka outsourcing. So what exactly does Sri Lanka quickly begin to grow in this sector? This is attributed to the fact that most sellers are looking for several locations for their business so they are turning to Sri Lanka

Introduction

I intend to do a constructive criticism on the article ‘’Sri Lanka – Realizing the potential of Outsourcing” which is written by Dr Arul Sivagananathan with this assignment.The content will be included with definition, advantages and disadvantages, Sri lanka’s potential of outsourcing ...etc.Also there will be a SWOT analysis to identify Strengths, Weaknesses, Opportunities and Threats of Sri Lanka as an offshore destination.

• What is offshore outsourcing

Types of offshore outsourcing

• The Advantages and disadvantages of Outsourcing

All Eyes Are Turning to Sri Lankan outsourcing

SWOT Analysis of Sri Lanka as an offshore destination

What is offshore outsourcing?

Outsourcing is the practice of hiring an external organization to perform some business functions in a country other than that in which the goods or services are actually developed or manufactured. It can be contrasted with offshoring, in which the functions are performed in a foreign country by a foreign subsidiary. Opponents say the practice of sending work overseas by countries with higher wages reduces their own domestic employment and domestic investment. Many jobs customer service jobs as well as in the sectors of information technology (data processing, computer programming and technical support) in countries like the United States and the United Kingdom - have been or are potentially affected .

• ITO — Information Technology Outsourcing
• BPO — Business Process Outsourcing
• Software R&D — offshore software development
• KPO - Knowledge Process Outsourcing

The Advantages and Disadvantages of Outsourcing

The Advantages of Outsourcing

• Speed and experience: Most of the time the tasks to providers that specialize in your field are outsourced. Outsourcing providers also have specific equipment and expertise, most of the times better than those in the organization of outsourcing. Indeed tasks can be completed faster and with better quality production
• Focus on the main process instead of support: Outsourcing of support processes gives the organization more time to strengthen its core business process.
• Risk allocation: one of the most important factors that determine the outcome of a campaign is risk analysis. The outsourcing of certain components of your business process helps the organization to change certain responsibilities outsourced provider. As the outsource provider is a specialist, who plan their mitigation factors better risks.
• Reduced operating costs and contracting: The outsourcing avoids the need to recruit people in the house; therefore, the recruitment and operating costs can be minimized greatly. This is one of the main advantages of outsourcing.

The Disadvantages of Outsourcing

• The risk of exposure of confidential data: When an organization outsources human resources, payroll and recruitment services, it is a risk if the exposure of confidential company information to a third party.
• Synchronization of deliverables: If you do not choose a suitable partner for outsourcing, some of the common problem areas include extended delivery times, production of sub-standard quality and improper categorization of responsibilities. Sometimes it is easier to regulate these factors within an organization rather than an outsourcing partner.
• Hidden costs: Although outsourcing most of the time is profitable, sometimes hidden costs involved in signing a contract while signing a contract through international borders can pose a serious threat.
• Lack of customer care: A provider may subcontract basis of the knowledge-needs of multiple organizations at once. In such situations, the sellers may lack a comprehensive approach to the tasks of your organization.

Sri Lanka is becoming stable after the war, however, still has some problems that make it not as competitive as neighboring India. Top among them is that Sri Lanka lacks a good support infrastructure outsourcing.

The good infrastructure including a good network of roads and modern airports is greater openness to outsourcing business.

Sri Lanka also has recreational facilities such as beautiful beaches, rich history, among other things that makes it a leisure center and a business center.

The approach therefore leads the finance and accounting reasons why everyone wants outsource of Sri Lanka. There are so many companies that outsource in these two sectors.

Outsourcing in Sri Lanka is that it comes with several incentives, some of which are cheap labor with excellent work ethic.

Moreover, the time lag with the West, especially the U.S., where there is a difference of about 12 hours of information and services could be hired and work during the day, so it is cheaper.

Outsourcing in Sri Lanka will be more favorable than the country produces so many graduates as well as graduates who are unable to get jobs full time. These professionals could be subcontracted to do some work as web design and maintenance jobs blogs, as well as in relation to the data entry. Sellers who have such jobs will find Sri Lanka a place to be in.

Sri Lanka is also benefiting from outsourcing not only at sea, but of the many research and development that have been developed under the outsourcing business model. Like most Asian countries, Sri Lanka also offers cheap labor compared to developed Western industrial powers and therefore outsourcing in Sri Lanka comes with the best offers.

Besides that, subject to resources and lack of experience in the outsourcing business. These are the setbacks that the country needs to address quickly to reach the same level as their neighbors.

National development programs focus on competition to ensure that Sri Lanka becomes a center of excellence and has had attention in several areas. Some of these areas focused on include software services sector that throws its weight in the banking, telecommunications and insurance sector is definitely going to boost BPO companies in Sri Lanka and make them more competitive worldwide. In addition to the IT-BPO has already been identified by the government as a key force in the growth of subcontractors.

Sri Lanka going to share some of the unique attributes that has made India stand out and is favored especially by the company outsourced offshore. These factors are the high level of literacy and specialty in the English language and Western legal model. This attracts many sellers from the west procedures found in Sri Lanka outsourcing easy so end up settling there.

To better promote outsourcing, Sri Lanka has created its own trade association, which aims Slasscom increasing competitiveness in the BPO business. In addition, Sri Lanka has more than seven telecom operators and an international connection through three submarine cables. Connects satellite, 3G, broadband and lease line are also available thereby increasing outsourcing of Sri Lanka especially in the IT BPO is one of the most developed in the affairs of Sri Lanka BPO.

There are a lot of disparities in populations through various parts of the world with developed countries mostly have less population, especially in the Western world. In contrast, less developed countries have high population especially Asian countries. This has created the essence of offshore outsourcing in a company that operates in some particular countries hires another based company to give it a different labor and services needed country. Some of the key areas in which outsourcing is well developed include, finance, administration, payroll administration, customer service and so on.

The main reason a company prefer outsourcing is the aspect of cheap labor. Some countries such as India and China have huge populations and workmanship of this cheaply. This has led many companies, especially outsourcing of U.S. origin in these countries. This does not work alone, some of these countries have well developed business partnerships that have worked well to ensure that their countries are competitive and offer preferred subcontractors.

India is the largest recipient of outsourcing abroad, with a market share of almost 60% of the global volume. However, recently there have been several new arrivals as Sri Lanka and Malaysia Philippines.As outsourcing can become a major source of income for Sri Lanka we have to learn lessons from India.As and we identify the strengths, weaknesses, opportunities and threats accurately and pursue strategies to capture a significant market share in outsourcing.

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