At some point during a company’s life cycle and certainly if business is experiencing substantial growth, the viability of outsourcing is usually at least considered and weighed. There are many variables to analyze, and with that said, in today’s competitive market place, outsourcing can make the difference as to surviving or not.
When considering outsourcing existing labor functions within your business the basic litmus test is determining if your business utilizes low level labor pools for high volume processes. Next, does the savings warrant transferring the process offshore. If you analysis shows that both of these factors hold true, your company might be an ideal candidate for outsourcing. Of course a primary concern will be to ensure quality control thus selecting the right outsourcing partner will be critical to your success.
One of the greatest advantages of global outsourcing is that it allows for increased efficiency within organizations. Although a number of less-skilled jobs are often lost to overseas production facilities, the increased efficiency allows these organizations to create more skilled positions and implement improved strategic plans.
In addition, the benefit for many consumers is that they can enjoy decreased prices created by increased levels of efficiency, which can in turn promote greater economic growth. The drive for lower prices and the increased demands of consumers for businesses to compete is one of the largest factors that drive many corporations to move production to offshore facilities.
A key downfall of outsourcing that can have severely negative impact is decreased quality control, minimal product development and improvement, and lower quality materials and workmanship that go into products and services.
Another disadvantage of offshore outsourcing, which is particularly detrimental to smaller companies, is the communication barrier that often exists between foreign countries of production where different language is spoken. However, technology improvements are helping to reduce this barrier making global communication possible for everyone.