Outsourcing - as the word suggests is giving contract to the third party for doing your work. This concept started in the year 1980 and has gain momentum since then. Work is distributes to others so as to make better use of the available labor, business capital, and other resources. Outsourcing projects mainly involves informational technology projects, real estate projects, accounting projects etc.
It involves the transfer of the entire management, assets and people along with the other resources to an external service company. A contract is signed with the client for a period of time. These outsourcing projects have their advantages as well as disadvantages. But overall these are more beneficial if properly regulated by the outsourcing company.
The benefits of these outsourcing projects are as follows:
- Reduction in overall cost: all the things are redefined such as the scope, quality levels, pricing, labor cost etc and the overall cost of the project is reduced due to off shoring, that is giving to the company outside one's country.
- Defined focus on the business: the entire resources are used for developing the core business.
- Improvement in knowledge, skills and quality: the skills of the contracting company are added to the existing resources and thereby enhancing the production.
- The contract company provides product innovation and capacity management of service. They also get the tax benefits on moving to the next country.
- Saving on manpower and other corporate trainings.
- Providing the best quality of products and people.
Hence you see that outsourcing projects have lot of advantages but as we say every good thing also has a bad side or a negative affect. Hence there are some disadvantages of these projects also. They are as follows:
- No time tracking: when you give the work to the other party you have to rely on them for the work. You have less control on them. Therefore you cannot dictate them and sometime suffer with them on time basis.
- Quality as per the cost: you have to rely on the third party for your work. It may happen sometime that the quality is not to the level of your standard verses the cost you are paying. In such cases sometime you may terminate the party.
- Communication problems: due to the change in country one can face this problem. This further results in delay of the project and increases the hidden cost, both in time and money. Language barrier is a critical thing which you should take care. Understanding the topic and doing the work have to be clearly stated and worked out.
Therefore the best way to start outsourcing is to work with a small project and gain experience to handle the large one. It is quite prevalent way of growing a company and has become popular in India as well as the western countries.
