The advantages and disadvantages of outsourcing

Nowadays most companies tend to let third party companies to handle the operation of their services. This initiative is considered to be a risky action, because it is primary made for deducting the costs as well as the particularization these companies has to offer. Besides of the advantages that many companies have faced during outsourcing there are some disadvantages also. Below I will describe further advantages and disadvantages of outsourcing in organizations such as Tesco.

Advantages of outsourcing

Reducing Costs

As I mentioned before reducing the costs is the main aspect that companies choose to use outsourcing.

These costs are usually referring to employee fees, office space expenses as well as some other costs such as outsourced workforce as it is proved to be way cheaper than workforce coming from developed countries.

Time Utilization

A widely known benefit that outsourcing has to offer, is the high speeding time that outsourced work is done. A great example of time utilization in a company would be the employee hiring procedure for the creation of a new team.

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Using outsourcing this time can be reduced to a maximal level.

Skills Acquisition

Another capability that outsourcing has to offer in a company is the adeptness that employees does not have. A characteristic example in a company such as Tesco is when the personnel needs have to deal with a new technology in order to perform best in their divisions. This way type of outsourcing helps the company to accomplish the pre mentioned benefits which are reducing both time and cost.

Operational Efficiency

Due to the fact that workforce is handled by outsourcing, individuals inside a company can have the opportunity concentrate more on their initial charges and perform better in their departments. This is an important reason for a company to use outsourcing as it allows the employees to emphasize on their proficiency but mostly on core business.

Customers Satisfaction

It has significant use when a company has a contract with a seller and so it is bound to offer a high service level as well as quality. That is why, when a company has an outsourced IT function and one of the employees calls in sick, they are obligated to find a surrogate that can accomplish the job and satisfy the customer.

Disadvantages of outsourcing

Quality Risk

Using outsourcing has drawbacks sometimes which can compromise the name and the reputation of a company. For example if a customer has a purchase and later on discovers that part of the product he paid for is damaged, then the company has the obligation to substitute that part by contacting their outsource supplier but the company will always carry the burden of a damaged product.

Constant Management

It is widely known that most companies nowadays, fail to outsource their projects due to the fact that they don’t have a proper management system. To elaborate, every company needs to possess a high intelligence manager, which will exclusively deal with the management of the outsourced projects. In such a big company as Tesco is, this person should fully qualified to determine the outsourced workforce demands, and ensure that all the providers are constantly updated to meet these demands.

Frustrating Conditions

These conditions are usually referring to employee’s knowledge. When we are dealing with big companies such as Tesco sometimes problems like language barriers occur. For example when a customer call center is outsourced to a different language company, there may be some annoyed customers that will deal with unhandy communication condition. Another strong frustration is the lack of organization knowledge, where outsourced employees are not surrounded by the same passion or obligation for an organization, making them usually look fool and unknowledgeable in the eyes of a customer. On the other hand, there are some frustrations detected from the company’s own personnel to the outsourced providers. This happens when the knowledge of the personnel is not in high levels, leading them to accuse for the bad service the outsourced supplier.

Security

It important for a customer to know that is respected and those they can trust the company by giving them personal information. That is why the management of the customer’s confidential information should be always processed by company’s employees and not the outsourced one.

Layoffs Fears

Outsourcing often fears the employees because their job may be in risk due other outsourced employees. This condition reflects negatively on the employees’ psychology, as well as their own job. To avoid this uncomfortable situation companies such as Tesco must protect their personnel from losing their temper by informing every single employee that they shouldn’t or in some cases should worry about losing their job.

Question 2

Hyperlinks

Homepage

http://en.wikipedia.org/wiki/Outsourcing

http://e-articles.info/e/a/title/Outsourcing-Help:-Pros-and-Cons-of-Outsourcing/

http://thethrivingsmallbusiness.com/articles/advantages-and-disadvantages-of-outsourcing/