Blog 03.04.2020

What outsourcing is?

„If there is a thing that we cannot do more efficiently, cheaper or better than a competition, there is no point in doing it further – we should hire the one who does it better than we do.” – Henry Ford

This quotation is probably the most appropriate to explain what exactly outsourcing is. You have a company, which rapidly grow and you have to control more and more things. Nobody will do it for you but outsourcing comes up to help you. If we would describe what outsourcing is in one sentence, it is commission a part of duties to external company.

What outsourcing is?

Outsourcing consists of three words – outside, resource, using, (and that’s what it means). It is use of knowledge and abilities of other units (humans) who are not hire in our company. Usually it is order specific functions, tasks or processes, which are well known by external company. The most important thing is a fact, that they both benefit. It is something like partnership. I need to point up, that the outsourcing is focused not on single order but long- term cooperation. I will give an example for easier imagine. It does not apply to large companies, which for example hire above 50 employees – we need an accountant in our company. We do not hire our own one, but we use an accounting office services. It is obvious, that (if the cooperation is successful),  we are not changing the accounting office every month.

Now let’s wonder why we do that. Let’s use the same example. Isn’t it better to have own trusted accountant in the company?

The main idea of outsourcing is to reduce costs, accountant maintenance will be more expensive than hire the office. We do not hire a new employees, we do not bear a costs related to training, hiring new employee, increasing technological devices. We aware, that maintenance many specialists in own company is really cost-intensive.

Improvement of quality, having a construction company, for example, will be better to trust a reliable accounting office than to hire one accountant and entrust her all tasks. The accounting office offers many specialists in this field and will keep up to date of all “tricks”

Another advantage is delegation tasks to other enterprise, thanks to that we may focus what is the most important. To take care of our basic activity, which gives us profit, and not to focus on “secondary” operations, but essential to our company.

It is also save of time. We commission to external company to complete the tasks, to carry on our bookkeeping in this case and we don’t have to worry – supposing we have trusted accounting office.

Disadvantages of outsourcing

Certainly we may fluently move to disadvantages.  It seems it is an ideal mechanism – We cannot do something good enough, we commission to other company and we reduce the costs. Therefore does outsourcing have any disadvantages? Well yes! Here are a few of them:

We use outsourcing because of costs reduction. If we are looking for superstitious cheap solutions, we will choose wrong company which is inappropriate, inexperienced or offers to us low quality service.

According to above – it may happen, that we choose inappropriate company to cooperate. Therefore a quality of service may not satisfy us or we may bear superstitious and unforeseen costs.

It may also happen, that we lose control of implementation of tasks. The more we outsource to external units, the less we know what is happening in our company. We may lose control on our project.

Cooperating with external company we will have to entrust more or less data. Of course there is a risk, that the outsourced company use the data against us.

To sum up

If you are afraid whether outsourcing is for you, you will have to deeply analyze your company. The main idea is cost reduction. Usually outsourcing is profitable. I suppose, that you will find the tasks, that you may outsource to more experienced people. There is also one more thing, which convince us to use outsourcing – it is just convenient. Using the outsourcing company services, we don’t have to worry about many things, we have got a guarantee qualified personnel, who will take care of our things, We have to remember, that responsibility lies also on our side. Need to point up, that it is worth to be aware of threats which involves outsourcing, to deeply analyze the company which we want to cooperate with.

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