Pros and Cons of Outsourcing ShaQuanvia Jones Potomac College Pros and Cons of Outsourcing What do you do when you need a job done that someone else specializes in? Well, of course you would hire that person to do the job. For instance, when you have a company, there are many parts to the company and each part has a different specialization. So they hire people that can do that job. It is the same way with larger companies. They hire manufacturers and smaller companies that specialize in a certain job to do it for them. This is all called outsourcing. Even though it sounds like myriads of advantages, it also has some disadvantages also.
What is outsourcing? Outsourcing is obtaining goods and services from an outside supplier. It is like a contract with someone or a company to do a particular job that they specialize in. A car factory would hire companies that make the different parts of the car. Since the company already has the supplies and machinery for the parts it would be cheaper. In this case, the company that is helping the car factory would be called a service provider. It is providing a service that it specializes in to a larger company. These service providers are also called third-party providers.
This name is given because it is the provider behind the main provider. Outsourcing is done in many companies like insurance companies, grocery stores, and many of the big businesses. Pros of Outsourcing With outsourcing comes many pros, or advantages. Outsourcing is very popular in our country and internationally. It helps businesses focus on their priorities or their main functions instead of secondary tasks. For example, if a company was good in handling finances, it would be hired to handle only the finances. Outsourcing also reduces expenses by finding certain industries purposes in areas where important costs are cheaper.
If you noticed, many of our clothes or shoes are made in China. This is an example of outsourcing but it is a certain type called offshoring. Offshoring is when companies are outsourcing to foreign countries. America does offshoring because it is cheaper to get goods from China. If outsourcing was not a dependent, a company would not have to worry about trying to communicate with another to get goods and services. By not doing outsourcing, a company will also know what is going on with its product and be aware of any incidents. Cons of Outsourcing Although there are many advantages to outsourcing, there are some disadvantages, or cons.
Many of the disadvantages would come from communication. When a company is receiving or purchasing goods from another country, they have to have a way to understand their language. With the diverse languages, it would be very hard; therefore offshoring can cause language barrier concerns. Another issue with offshoring would be the different time zones. The products would have to be ordered at the right time because getting products internationally are hard to do. The products have to be in before a certain time. Although outsourcing makes it cheaper for goods, this may also cause many Americans to lose jobs.
If outsourcing was not depended on, a company would have to do all the work by their self which would cost more and take longer. As you can see, outsourcing is a very important and useful thing when it comes to goods and services. It has some downfalls, but staying focused and planning ahead of time would be a very effective plan when hiring specialists or handling business overseas. Outsourcing only helps specialize in certain functions so that companies will not have to come out of pocket for extra expenses. Labor is also cheaper when it comes to outsourcing.
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