Pros and Cons of Outsourcing Some Business Practices - Essay Example

Pros and Cons of Outsourcing some Business Practices Name Instructor’s Name Date Table of Contents Table of Contents 1 Introduction 3 Advantages 4 Disadvantages 5 Conclusion 6 Reference 8 Introduction Every business no matter the form it is or rather what it deals with, faces great challenges. This is because once in while there are changes that have to occur both internally and externally. The mode of business Para adventure changes, the issue of competition arises, new technologies keeps evolving and many other changes. All of these are the main causes of outsourcing as far as business practices are concerned. This means that there is a great need for the outsourcing to ensure that the business strategies are implemented and yield the best results. The decision to outsource any business practice or rather to keep practicing it is a matter of discovering the best balance between existing between the workflow, managing labor costs, employee capabilities, core competencies, customer commitments as well as considering the long-term and the short-term risks that are involved. This is because improper consideration of any of the above factors may lead to a great disaster for any business. A very good example is the factor of customer commitment (John, 2008). If a company decides to make some changes in the terms of some of their practices without first considering the customer whom it servers, then there could arise a problem. This is because; many of the customers are attached to a certain business simply because of the king of product that they produce. By changing the routine way of production means, they will lose their customers. This is why the issue of consideration comes in. Some of the small companies as a routine outsource some of their processing of payroll, distributing and accounting and even many other important components or functions. This is because they simply because they are not able to hire or pay for the expenses of the internal expertise yet they also do not have the time to do the job themselves, this kind of practice not only done by the small companies or businesses but also by the big companies outsource for the purposes of cost reduction (Peter, 2007). There are a number of advantages for outsourcing business practices as well as some disadvantages. Advantages Many business owners or rather company heads, go for the option for the purposes of giving the best. This is the main reason as to why a business will go an extra mile to hire a consultant to produce the best. A business hiring an expert in the areas of taxes and payrolls is a perfect example. This is aimed at increasing the expertise in the business. Another advantage is that it gives a business a chance to focus on its core values as points of competition. This is because for every business the core values are the ones that give it a chance to be competent in the area of production it is involved (Salder & Craig, 2003). As a result, then the business’s competence in sales, general performances, and profitability is increased. The issue of outsourcing also gives way to unbiased perspective. This means that the business is able to hire the right talent or rather skill for the right project also. This in addition, then enables the business’s objectives to be met and in an effective as well as efficient manner. Moreover, as a result, there is a provision of new ideas or rather a room for innovation that is introduced. Another great advantage is that it gives the business a chance to be cost effective in its production. This is because only what is needed is paid for. Most businesses face a challenge of workflow cycle. This is because there are times that in the business there is not enough for everyone to do or rather to be busy while other times there is more than enough for the employees to do (Lawrence & Michael, 2007). Therefore, outsourcing for any business enables it to hire expertise as well as pay for the services that are needed for that particular time. It enables the business to expand its capabilities. This is in terms of resources both human as well as finances, by doing this, the business ends up with the right expertise or professionals for the needed work (Debbie, 2005). This in turn, enables the business to level it own playing field especially in a situation where small businesses are competing with the large business. Disadvantages Outsourcing in any business may sound like it is a very simple and very favorable thing but in actual sense it has many disadvantages. One of the main disadvantages is the fact that it may end up annoying some of the employees (Paul, 2002). This will happen because when a business goes ahead and hires an outsider as an expertise to perform a duty that someone is hired or rather employed in the business to do, and then the person will not be happy about it (Marquis, 2006). In some cases, some of the employees even are disgruntled and displaced by the new hired expertise. As a result, the quality of their work is greatly affected. Another disadvantage is the fact that there could be a fall in the returns of the business. All businesses at their personal level carry some risks and outsourcing is not necessarily a guarantee that the quality of the production will improve. In addition, it is not necessary that the costs will be reduced in terms of cutting down the labor (Thompson & Martin, 2005). This means that a business may end up incurring more expenses in the effort of reducing the expenses in terms of labor cost. The owner of the business may experience less control as well as less loyalty by introducing out sourcing. This is because the outsourced employees will not at times have the same interest in the business as the ones that are hired (Salder & Craig, 2003). In addition, there are some other contributing factors to that whereby the employees who are contracted may not be directly answerable to the owner of the business. The bill at the end of the day, may also be higher or even more than what was initially expected. This is because the issue of contracting at times gets very tricky when outsourcing presents some difficulties (Peter, 2007). This is especially in the form of time, hidden costs, and unexpected scope of work to be done. This comes in when the employees that are being contracted take more time to learn the processes and the procedure of the company. This means that more financers as well as time may be consumed as a result. There is also a great variation in terms of external and internal perspective. It is believed that in most cases the issue of outsourcing brings about capability and resource expansion. Further, it is also believed that it brings about an advantage for the business to its competitors (Thompson & Martin, 2005). In actual sense not all of the above have worked. There is also the issue of lack of confidentiality as well as conflict of interest. This is because some of the competitive businesses could also be using the same person for the same work in outsourcing jobs (Donald, 2008). People since it is their nature do talk to each other. So the same expertise may be tempted to talk about what the other business is doing for increasing their production. On the process, he ends up letting out the secrets. Conclusion In conclusion, it is very advantageous for any business to practice outsourcing. This is because despite there being many disadvantages, it is also very good. Therefore, it is very important for the companies that are practicing it to avoid the disadvantages, which may greatly cost the business by shopping around, where by they get proposals, and internalize any they want and predict any negative outcome (Peter, 2007). They should also negotiate for the contracts to ensure that they are getting to the right ones and to calculate the cost effects. Finally, there should be validation of the company to be involved to ensure it has the right reputation. This will enable the business that is contracting the company for expertise to predict the outcome. In addition, any business must be able to negotiate for the deals before being fully involved with any expertise and evaluate the cost. This will prevent some of the disadvantages from happening, which affects the business. Reference Debbie, H., (2005). Personal financial planning: theory and practice. Oxford: Oxford University Press. Donald, F. (2008). Entrepreneurship: theory, process and practice. Oxford: University of oxford press. John, S. (2008). Workforce Management. Costa Mesa, 85(18), pp. 50. Lawrence, J. & Michael, D., 2007. Personal financial planning. Canada: Cengage Learning. Marquis, H. (2006). MIT Sloan Management Review. 47(4) pp. 12. Paul, M. (2002). National Mortgage News. New York, 27(6), pp. 6. Peter, F. (2007). The practice of management. New York: John Wiley & sons. Salder, P., & Craig, J. (2003). Strategic management (2nd Ed.).London: Kogan Page Publishers. Thompson, J. & Martin, F. (2005). Strategic management: awareness and change (5th Ed.). California: Cengage Learning EMEA. Read More