The “TRUTH” about Outsourcing

If you are looking for way to cut your labor costs, is outsourcing a good solution or a red flag to current employees and clients? When you outsource, you get the services you need, while someone - maybe the workers themselves - absorb the cost of overhead, benefits, and taxes. For supplementary services you might not need onsite on a regular basis, such as technology services, marketing, or office cleaning, this can make perfect sense. Where it gets tricky is when you want to use offsite - and often offshore - workers to do the basic work of the company. Due to the speed and efficiency of modern shipping and telecommunication, some aspects of your business, such as manufacturing, assembly, quality control, and customer service, might be performed anywhere without much loss of continuity. In the case of making a product, waiting for delivery might be more economical than warehousing component parts on site. If you are in control of the processes, you should suffer no loss of quality. If you subcontract production to an outside vendor, you must verify that their quality control is as good or better than yours. When you outsource, you may look for lower labor costs or lower facility costs, which can be good for you, but disruptive to the local economy and disturbing to workers who may fear they will lose their jobs. At the same time, brick and mortar employees in new areas, plus virtual workers, have new job opportunities. They can often perform the work as efficiently in one location or another, including from their homes. You can have access to a wider labor pool. Especially in the case of virtual workers, outsourcing offers some workers flexibility they might not find in the normal business world. The downside is that often the work is part time as well as lower paid, while workers have no benefits. Workers are not as well off, which limits their spending power. When outsourcing is to an international workforce, new considerations come into play. Foreign workers have an impact on the national economy, as no local area benefits from the job growth, taxes, and spending power of the workers. At a time when unemployment is high in many areas of the U.S. and Canada, many in the society question why outsourcing is an option, which gives the concept - and your company - a bad name. For you, as an employer, managing outsourced foreign workers can be more difficult than managing ones based in the same country. You may be dealing with a company who provides turnkey service, but the work ethic, work attitudes, and manner of negotiating might give you some unplanned headaches that offset the cost savings you think you will have on paper. In addition, when the workers do not speak the native language, customers may be frustrated when they try to communicate; even if the international worker has studied the language,they may not know the idioms or have the right inflection to be easily understood. Customers can feel that service levels are lower if they cannot communicate with the service center or when they feel that the foreign rep with different vocal patterns appears to have a superior attitude. What is the "truth" about outsourcing? To say the least, it is a complex solution which raises complex issues and has many pros and cons. When you look to lower labor costs, outsourcing may seem like a reasonable approach to control variable costs. Especially if you are considering using off-shore workers, be careful to consider the impact on your reputation, worker morale, and customer attitudes before making the change.