The Advantages Of Outsourcing
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The Advantages of Outsourcing
Outsourcing has become a very popular alternative for a number of very valid reasons. Outsourcing initially emerged as a way for companies to cut costs by having processes such as manufacturing and assembly done in overseas locations where costs were much lower. Lower wages and operating costs both contributed to these reduced costs. These lower costs were appealing because they greatly improved the profit margins for the companies. However, outsourcing is now gaining in popularity for a variety of other reasons. While cost reduction is still a primary advantage, other elements such as access to industry experts, a larger workforce and more flexible options are being embraced as welcomed advantages offered by outsourcing.
Cost Reductions from Outsourcing
As previously mentioned reducing costs was the original purpose of outsourcing and although outsourcing has since been demonstrated to have other significant advantages, cost reduction still remains one of the prime advantages. Companies look to outsource tasks which would be more costly to complete in-house. An example of this type of task would be a software related task requiring specialized training. Companies who do not have an on staff employee qualified to complete this task can benefit financially by outsourcing this task.
There may be significant fees required to retain the services of an industry expert on a contractual basis but the efficiency of this individual will enable him to complete the task much more quickly than it could have been done in-house. If the task were not outsourced an in-house employee would have had to complete the task and may have taken significantly longer costing the company more in the long run.
On Call Experts
In the previous section we discussed how having industry experts available to complete outsourced tasks can result in a cost savings for the company but having these experts on call also provides the potential for new opportunities for the company. With experts waiting in the wings to assist, the company is able to go after larger and more specialized types of work. This is important because in doing this the company can find themselves enjoying greater prosperity.
A Larger Workforce
Still another advantage to outsourcing is the benefit of enjoying a larger workforce when necessary without the hassle of maintaining a larger staff. Through outsourcing companies can bring in additional employees on a contract basis during times of prosperity without worrying about having to lay them off or keep them utilized when the surge of work begins to wane. This is particularly relevant in industries which enjoy peak seasons as well as off seasons.
Another advantage of having a larger workforce is the ability to generate a larger profit. This is important because smaller companies can find themselves in a position where they can compete with larger companies for bigger jobs by outsourcing a portion of the workload.
Finally, more flexibility is another considerable advantage to outsourcing work. Even the most well planned projects may suddenly end up behind schedule or under a time crunch due to minor errors, changes in plans or other incidental activities. Smaller companies who do not have the resources to compensate for these inevitable mishaps may find themselves in serious trouble without the ability to outsource work when necessary. These companies can take advantage of outsourcing in times of trouble to help them deal with problems without alienating clients or performing poorly on a project.