Negative Aspects Of Outsourcing
Outsourcing is subcontracting work to a third-party company or individual for product creation, design, or some other service. Outsourcing has always been carried out by both major businesses and smaller companies. As far as corporations go, this means business process outsourcing (BPO).
The Internet has long been bitten by the outsourcing bug and most online businesses tend to allot most of their product creation to outsourcing, and some have started outsourcing their marketing as well. Internet marketers outsource projects like e-book creation, article writing, Web development and design, software development, making lists of affiliate programs with all the details, sorting particular information into lists, and every other job that is either time consuming or that requires specific expertise they don’t personally possess.
Outsourcing is being described by some as an unfortunate by-product of a global economy. The thinking is simply that when the same work can be done by someone else cheaper, get it done. While this is certainly a more profitable way of conducting a business, it does have its negative side too.
Outsourcing is said to be for people who have little patience and a lot of money. There may be people who think that looking at the disadvantages of outsourcing amounts to thinking negatively; however, it is always better to consider all the disadvantages in advance to avoid any future surprises (or should we say “shocks?”).
One of the most crucial facts of life is that no third person or company can understand the product better than the owner. In spite of their best efforts, they may not be able to help business owners reach their goals.
The potential for a communication gap is said to be one of the demerits of outsourcing, where the person who the work is outsourced to may not be familiar with a particular culture and that lack of understanding could reflect in the work performed.
When confidential data is outsourced, it raises the question of data protection, as data protection policies differ. Many countries may not even have proper controls in place.
When work is outsourced, the need for Internet access is essential, and if there happens to be a problem or an outage at the place where some emergency work is outsourced, that could lead to losses for the person outsourcing.
If it is marketing that is being outsourced, feedback from the customers is routed through other channels, making the owner lose some level of control. Another thing to consider is that even companies which perform outsourced work have their own way of doing things, and it is not possible to bring them to think any differently.
The lack of insight of a business is a drawback with outsourcing marketing. Irrespective of the level of qualification of the professionals being outsourced to, they certainly cannot be as good at it as the owner. These companies or individuals that one is outsourcing to may be efficient in their ability to contact a huge number of customers, but it must be remembered that they are not representing any one client exclusively.
Many people who have outsourced to new companies or individuals complain of being burned due to making advance payments and losing money from absconding virtual assistants, which is in fact a common phenomenon online.
Sometimes, it so happens that the third-party companies start demanding more money than was agreed upon, as they realize that the person outsourcing is totally dependent on their services. Major companies may not resort to this; however, it has been known to happen in the outsourcing world. This problem arises because the Web in most cases has no face.
Last but not the least, when offshore outsourcing is given, the difference in time zones can be a potential hazard.
Another negative aspect to offshore outsourcing that has been under discussion for a long while now, both online and offline, revolves around the loss of work to people from the hiring company’s country. They consider it a threat to their economy, even if it is online outsourcing. If an American is outsourcing work offshore, this is believed to be work taken away from another American who could have done that job for them.
In spite of all these disadvantages, the outsource boom is on and steadily increasing with more and more webmasters looking for ways to get the job done cheaper and better, and save in terms of money and effort.
The problem is when you outsource to another country. If they cant speak english why should we have to talk to them. Its hard enough having a conversation with different people from different areas. But when you through in someone who can barely speak regular english they cannot deal with general Americans. I am from the south and have a hard enough time speaking with someone from up north. Much less with someone in India. Give me a break. Keep the work here and start spending some money to help the failing economy.
Outsourcing is both a treasure and a bane of my existence. I lose jobs to people who underbid me, and aren’t qualified for the work. I make money FIXING the work they do. It is ridiculous for people to purchase foreign services for their writing work; it’s almost always a mistake.
Good article and good points.
It may be a bit much however to try and tackle offshore outsourcing and outsourcing in general in the same post.
Also in reference to your comment that “no third person or company can understand the product better than the owner”, I understand your point, however keep in mind that many owners do not know everything about their product or how best to market it.
Take for example any episode of the American Chopper TV show where the Orange County Chopper guys make a different custom motorcycle each show. If you have ever seen it you could not help but notice that on every episode you can find them using / outsourcing some aspect of the build. Typically the outsourcing is done to a chrome or paint shop and in that type of example I think most would agree the shop owners were making the right call to make their product the best it could be without having to hire a full time specialist for those jobs.
So at times local outsourcing has become an extension of the specialization of labor principal and many firms can and do benefit by outsourcing specific jobs to specialized local talent.
Outsourcing is an exceptional way to capitalize in on your core concerns in today’s business world. :d With the ever growing unsuitability of our economy.
One must come to the conclusion and determine if business process outsourcing is for their business or not. 
What if it was your only option? The banks have been given a financial bailout, however what about the rest of the suffering business economy in general? Literally a year worth of downward upside down stock portfolio’s. Trillions of $$ Dollars were lost and sure not a result of outsourcing.
I think we need to diversify ourselves and become pioneers of the future together rather than continuing to be adverse!
All outsourcing or SEO companies are all have advantages and disadvantages. There is no business firms in this world without disadvatages or perfect.
Well every individual has its own opinion. But the truth is “Its a good way of conducting business”
Outsourcing indeed is a new way of doing business. You have written a really good article which lay it all out there and prepares the potential outsourcing clients on what to expect when outsourcing jobs and tasks.
IMO, You’re specifically laying down the pitfalls of offshore outsourcing and not outsourcing in general and rather than outsourcing crucial components of a business - out of the company’s core competencies, e.g. IT, accounting and payroll outsourcing would greatly enhance the company’s productivity.
Getting access to high-quality services at a cost-effective price is the biggest benefit that you can get with outsourcing.
Payroll processing can be tricky and hard to do if you arent a pro, often it wouldnt hurt debating some other options.
Firstly there is a situation today where employees have started fearing job losses. This gives rise to lower motivation and thereby decline in services. After all who would like to serve an organization that he feels is going to sack him for all his services. An employee can give the company 100% if and only if he feels that he is an integral part of the organization and not some dummy to be sacked when ever the company feels like. One more point here is that a sacked employee could even join hands with competitors and bring to light the weaknesses of the company.
Outsourcing can also lead to the alterations of well established job processes that can lead to unnecessary delays and conflicts. Lack of coordination between people having different cultural backgrounds and different time zones can also lead to time losses.
Looking at all these drawbacks, outsourcing really does not seem to be the magic answer for cutting costs. On the contrary outsourcing is way more complicated and can lead to drastic situational developments in the afterward. The governments of first world nations at this point need to analyze this situation and help develop a fair playing ground for organizations taking into consideration the negative effects of outsourcing offshore.
There is a rapid growth of Outsorcing these days as manufactures try to cut cost and maximize profit.,~`
sometimes article writing too much time and effort, specially when you are writing lots of stuff;,~
The reason why offshore outsourcing is booming right now is because of the global recession. More and more companies- whether big or small prefer to outsource because it saves them time, effort, and money.
Let’s take web outsourcing for example. web development jobs are sent to developing countries such as the Philippines because of the cheaper labor costs. The cost of hiring a web developer in the US can be equivalent to hiring a web developer, an SEO team, and a customer support team in the Philippines. It’s up to the business owner and the outsourcing team to collaborate and set realistic goal expectations. Language is not a barrier anymore, neither collaborative tools which are available anywhere.
My point is, some of the issues stated by the author affects the businesses minimally. Outsourcing is a booming industry simply because it works.
Today, two years later after this article, things are a little bit changed and most of these challenges already addressed.
….When confidential data is outsourced…. most of the well established outsourcing providers today have strict rules about data security. In many BPO projects you don’t have access to e-mails or to Internet at all. Of course, security breaches can happen…Latest example Wikileaks
…the need for Internet access is essential…This is why you have Business Continuity Planning, with cross support from offshore center in another continent, for example. To make sure that even in times of revolt or tsunamis these guys are there processing your data
…lack of insight of a business is a drawback…I don’t know about outsourcing marketing activities , but keeping an eye on the final result of the outsourcing relationship and if it is really good, this can compensate the lack of insight
…they certainly cannot be as good at it as the owner…besides marketing again, unfortunately you can realize that a lot of globally presented companies don’t know how to control certain aspects of their business processes
…they are not representing any one client exclusively….true, still no cure for that
…hird-party companies start demanding more money than was agreed upon…that could happen to small/middle sized companies depending on just one provider, the larger ones are using multiple vendors
…the difference in time zones can be a potential hazard…outsourcing companies have delivery centers on nearly every continent. For Europe you can be serviced from eastern European centers,USA and Canada - India works 24/7, guys
…loss of work to people from the hiring company’s country…inevitable, many theories on the effect, after all people have to adapt. The guys on the other end of the phone will also loose their jobs once the cost of labor there jumps too high
outsourcing is always essential to businesses coz it helps reduce the cost of production,:-
In briefly reading through these articles I would kindly like to present my opinion. Outsourcing today is the most efficient, most logical way of import. It’s The only way!
You are right..outsourcing has also bad parts, especially when working with other countries.. But with a good organization everything can be simple and useful.
Anyway, I think outsourcing, despite of the bad parts, is still the best way to make a business work on this days..with this economic crisis..