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Understanding Business Process Outsourcing in today's world

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Day after day, more and more business are shifting towards outsourcing their non-core activities. With growing competition, increasing costs and resource issues have made outsourcing inevitable for businesses.

Not only have the business outsourced their non core function, but many of the medium and large sized business have outsourced their R&D functions too. This tells the story by itself. Outsourcing is playing a vital role and is now a backbone to major business across the world.

We have observed over a period of time that, many businesses have reduced their in-house workforce, but have kept the outsourced workforce unit intact.

Major reason behind companies opting for outsourcing:

-       Reduce Cost

-       Business and Economy friendly environment

-       Lack of resources / talent pool

-       Increasing competition

-       24/7 Support

-       Technological benefits

Let us also look at some of the Outsourcing myths

-       Most of them outsource only to reduce costs

-       Unemployment and lay offs are purely because of Outsourcing

-       Government should ban outsourcing

While there are benefits of outsourcing, it has some disadvantages associated with it.

Here are some of the potential threats / disadvantages of Outsourcing:

-       Lack of control over staff

-       Lack of knowledge / experience / skill

-       Resource issues / challenges

-       Cultural and Language Barrier

-       Security and Confidentiality Issues

-       Quality issues

-       Hidden Costs 

Irrespective of the challenges or threats or issues associated with outsourcing, it is in high demand; and overall mood of the market has been positive. While there are outsourcing companies who have quality and service delivery issues; there are many who deliver on or before time with outstanding service delivery.

In my opinion, my vote goes for outsourcing!

Source: Self

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Steve Smith

Steve has been associated with the UK Contracting industry for over a decade now. He is a sports enthusiast and a die hard Arsenal fan.

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