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Outsourcing Management – Knowing The Disadvantages

Outsourcing management involves hiring an outside party to take over the management of a particular process in a company. The primary purpose for outsourcing management of particular services is to lower the amount of cash and resources deployed to a given business process in house. This also gives the management more time to concentrate on core processes and enhances the business flexibility to meet various business targets.

When outsourcing management, the business hands over the management and control of a process to another service provider but it still retains overall ownership and responsibility of the process. While it is true that the business will have a contract with the service provider, it still has to ensure everything is done in a way that does not jeopardize its relationship with customers, shareholders, employees and regulators. This is important for businesses to realize since the third-party service providers may not be driven by the same aspirations, values, standards and purposes that drives the business. This form of cross-purpose can lead to the business not attaining what it anticipated when getting into outsourcing.

Another key disadvantage can be the occurrence of hidden fees that may not have been covered by the contract or were defined ambiguously. Because of this, some businesses have found themselves spending more than they thought and thus defeating the very goal of saving costs through outsourcing management. For this reason, a business would be well advised to incur considerable costs engaging an experienced lawyer to scan through the contract before committing to it. This one action can prevent future problems.

Another disadvantage of outsourcing management is the risk of financial instability in the service provider. The economic well-being of the third-party service provider has direct repercussions on their ability to deliver services on time. No business would want to wake up one day and find that the outsourcing company has gone bankrupt leaving it with critical business processes unattended. Then there is the outsourcing companies that attempt to cut cost and thus lower the quality of service being provided to the business.

Opting for outsourcing management can also hinder a business’ ability to rapidly respond to changes in the business environment. Hiring an outsourcing company also leads to the laying off of some in house staff which has repercussions on internal staff morale and on the perception of the business within the community it operates in.

Daven Michaels Author of the book Outsource This!

6 Responses to “Outsourcing Management – Knowing The Disadvantages”

  1. Chloe Annicah says:

    wow! what a nice blog you’ve posted Daven!

    OUTSOURCING is really good in business!

  2. Todd Nuttall says:

    Its great to know this, so now I know what should I ask to a outsourcing company when I hire an agent for outsourcing my business.

  3. Leah Jones- Monroe says:

    Thanks for the tips Daven and I am looking forward to more tips like this!

  4. Jc James says:

    Great article!

    Thank you for sharing what Outsourcing Management is and its disadvantages… Now, I have an idea where to go.

  5. Tiburzz says:

    wow!!please continue to give us this kind of very informative ideas..you rally ROCK!!!thanks Daven

  6. MIMI says:

    Whenever there’s advantage of course the opposite is present. These disadvantages only proves us that the risk when it comes to outsourcing is high. But of course if you are very sure about your Virtual Assistant then you won’t be needing to think that you’re just wasting your time and money. At 123 Employee, they provide you the best assistance. Believe me, I have experienced their awesome work. :)

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