Many businesses seem to prefer hiring an outsourcing company instead of having an in house department perform a certain task. This move is usually aimed at improving capital utilization and lowering overall costs. Companies are increasingly hiring a business outsourcing company to perform both tangible and intangible processes where the company does not have sufficient internal competence. However, as much as outsourcing offers business great opportunities, it also poses challenges to the business and a company ought to be strategic in making any decision to outsource if it is to survive in the competitive world of business.

Some of the most notable downsides of business outsourcing companies are language barriers, differing cultures and sometimes time zones that are wide apart. Such problems pose a challenge to both the client and the business outsourcing company. The other side of the coin is that the opportunities presented by using a business outsourcing service are most significant for service oriented businesses. For instance, if a business needs to have a website, they can select from individuals from anywhere in the world via the internet.

Outsourcing allows businesses the opportunity of being more focused on what they do best. Also, because their competitors may also be outsourcing, the business is in a better position of competing globally. Whereas using a business outsourcing company has the promise of better service for a client’s customers, this is not a guarantee. Sometimes the third party service providers may have a limited supply of people with the right competence. This might be due to lower levels of education among staff in the attempt to source the cheapest labor possible and maximize their profit. This is a problem in many of the world’s traditional destinations for outsourcing services.

Using a business outsourcing company can lead to a substantial proportion of a company’s workforce being laid off. Because this can cause lower morale among remaining employees, it is very possible for outsourcing to lead to a company losing its best employees. This is one of the reasons some people have viewed outsourcing as one the main causes of the loss of  jobs in developed countries and the drop in wages. The counter argument is that outsourcing is reckoned to be a way of bringing better services and products to customers at lower costs and eventually lead to a better economic environment overall.

Daven Michaels Author of the book Outsource This!