Outsourcing Advantages And Disadvantages

Hello, as per your request I am writing this report to inform you on the advantages and disadvantages of outsourcing and whether or not you should implement this into your company. I thoroughly go through each point and explain why it is an advantage or disadvantage. As well as for advantages and disadvantages I will also explain how outsourcing can be beneficial for your company. By the end of this report I will give a recommendation on whether or not you should implement outsourcing into your company.

Advantages of Outsourcing:

With outsourcing implemented into your business it allows you to have more increased flexibility. Well basically with increased flexibility it allows you to “respond to shifts and shocks, new technology, unanticipated

So the first disadvantage to outsourcing would be hidden fees. Hidden fees can be costs that were not agreed upon the contract but somehow make their way into the business. An example of a hidden fee would be having an agreement with a certain vendor, but then wanting to them to do something else a year later. This would result in the vendor charging you extra because of the new addition of work. Another example would be outsourcing a manufacturing job to a vendor, but that vendor needed some new machinery in order to complete the task. In this situation the vendor would most likely charge you for the new equipment. Usually when companies deal with outsourcing they feel as if they have a fixed cost throughout the contract, but in most cases additional costs are usually gained throughout the process of the job. Another disadvantage of outsourcing would be the exposure to confidential data. In most cases vendors that deal with outsourcing are not only working your company, they may be working for other companies as well and can be exposed many companies confidential information. In most cases businesses must proceed with extra caution in order to make sure that data confidentiality is not put at risk and can be exposed to competing companies. Chen, Y., Dubey, P., & Sen, D. (2011) This can be protected through with agreements protecting a company's confidentiality ensuring that none of their information will be exposed. However this cannot be guaranteed because vendors may expose a company's confidential information without the company being aware. Due to this disadvantage outsourcing can be a major risk for companies because you are basically allowing another company deep into your business depending on what types of jobs you are outsourcing. If a company outsources a jobs it would be recommended not to outsource jobs that allow access to