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20 Advantages and Disadvantages of Outsourcing from Your Small Business

Personal Productivity20 Advantages and Disadvantages of Outsourcing from Your Small Business

Over the course of the past couple of decades, outsourcing has become one of the most hotly debated topics in American politics. Nobody likes to see jobs go overseas, and lawmakers love to use a firm stance against the threat of outsourcing as a rallying point for their wider business agendas.

But in the realm of small business, outsourcing doesn’t necessarily mean taking work overseas. When small business owners talk about outsourcing, they’re usually thinking of farming out content work to freelance writers, hiring an accountancy firm to take on the book keeping or relying on an employment agency to track down and deploy hired help.

Advantages and Disadvantages of Outsourcing

In the right context and deployed shrewdly, outsourcing can be a fantastic way for small business owners to improve efficiencies and bolster their company’s bottom line. But that doesn’t mean the practice isn’t without its own disadvantages, too. Outsourcing isn’t right for every situation, and so you’ve got to think long and hard before investing time and energy in farming out work.

To help you get started, here are 20 advantages and disadvantages of outsourcing from your small business.

Advantages of Outsourcing

1. You Get More Experts

Your core team might be fantastic at a few things, but nobody is perfect at everything. By outsourcing particular tasks, companies are often able to substantially improve performance by drawing on the niche skills of experts in certain fields.

2. Things Get Done Fast

One of the top reasons small businesses tend to outsource work is because it will get done quicker. If you’re working with a limited number of staff members, you can get things done a whole lot quicker by passing time-consuming tasks on to freelancers or external agencies.

3. You’re Able to Focus on What Matters

Another benefit of outsourcing tasks is enhanced freedom. By passing on supporting processes, you’ll be able to concentrate your skills on strengthening and improving the core processes that help make your business tick.

4. You Can Share Some Risk

One of the most important factors in any project is risk assessment and analysis. By outsourcing certain campaigns or processes on to experts in their respective fields, you will benefit from their enhanced ability to plan and mitigate potential risks.

5. You Can Reduce Costs

As one might imagine, outsourcing piecemeal work is almost always going to be cheaper than hiring permanent full time staff. Not only will you save time and money on recruitment, but your profit will also be extended than s to shorter overheads.

6. You Can Work Around the Clock

One major benefit of outsourcing digital work overseas is the substantial differences you might encounter in terms of time zones and holidays. Although this can pose an initial hurdle logistically, once overcome it can effectively mean your business is running even while you’re fast asleep.

7. You Can Simplify Project Management

If you choose to outsource work via a wide range of specialist freelance websites and online services, you’re often provided dynamic and intuitive platforms that will help you to effectively manage what’s being done, when it’s due for submission and how it will be paid. Most of this can be automated, freeing up your time for more important work.

8. You Simplify Work Relationships

Quite a few small business teams are tight-knit groups of friends and family — which is fantastic. But when you’re incredibly close to your staff members, it can also lead to issues when work isn’t being done up to par. By outsourcing work, you’ll typically be able to minimize work relationships to simple, contractual arrangements.

9. Efforts Are More Targeted

Another overlooked advantage of outsourcing is that it enables you to plan and execute more effective, targeted campaigns and projects that you wouldn’t ordinarily be able to take on. This gives your business the chance to take new risks and experiment with different methods of exposure.

10. You Get Peace of Mind

At the end of the day, choosing to outsource with a reliable individual or agency should give you peace of mind that tasks are being handled expertly and efficiently without you having to worry or lift a finger. What could be better?

Disadvantages of Outsourcing

1. You Lose Some Control

As you might expect, when you farm work out to external agencies or freelancers, you’re losing control of how those tasks are being monitored and performed. So long as you know and trust who you’ve hired, that shouldn’t be a huge issue – but you’ve got to tread carefully.

2. There are Hidden Costs

Although outsourcing work is generally considered cheaper, yo must also beware of getting ripped off. Outsourcing companies or big agencies will typically ask small business owners to sign lengthy contractual agreements, and they’ll include plenty of fine print. If you don’t read the terms carefully, you could get hit with unexpected costs.

3. There are Security Risks

In this age of data protection, it’s essential that you exercise caution whenever using customer data. If you plan to outsource processes that require personal data, you could be placing the privacy of others or security of your business at risk by passing that data on to other people.

4. You Reduce Quality Control

Outsourcing companies and some freelancers may often be motivated by profit rather than a job well done. That means the work you send out may come back quickly, but will lack the standard and quality that customers have come to expect from your products or services.

5. You Share Financial Burdens

Although it can be nice to bring in expert agencies to share in risks, it can be pretty dangerous to tie your business to the financial well-being of another company. Again, you’ve got to spell out any and all terms and conditions in contractual arrangements plainly – because you don’t want to take a financial hit if they fail to deliver.

6. You Risk Public Backlash

If you’re taking work overseas (even just to write a blog or two), your business very well may run into ill will from consumers that have taken a moral stance against outsourcing. Right or wrong, for better or for worse, some form of criticism is often inevitable.

7. You Shift Time Frames

One major disadvantage of outsourcing particular tasks is the risk that your freelancers or partner agency may be marching to the beat of a different drum. As a result, it might be difficult to synchronize schedules in order to ensure your customers receive what’s promised to them on a reliable timeline.

8. You Can Lose Your Focus

Because many outsourcing agencies or freelancers tend to service multiple clients at any given time, the work you’re sending out may not be receiving the focus it deserves. Depending on the processes you’re outsourcing, that lack of focus could be detrimental to your small business.

9. Things Get Lost in Translation

It doesn’t matter whether you’re dealing with overseas freelancers or some talented expert just up the street – but if you’re handing out remote work via email or telephone, important instructions are often lost in translation. That could cause you serious time, money and hassle.

10. You May Face Moral Dilemmas

While it may not be an issue for everyone, a major disadvantage of outsourcing is that you may be denying your team or a talented local agency crucial work or development opportunities. Growth begets growth, and by outsourcing work, you may not be contributing to the growth of your community.

Outsource Photo via Shutterstock


Nash Riggins

Nash Riggins Nash Riggins is a Staff Writer for Small Business Trends and an American journalist based in central Scotland. Nash covers industry studies, emerging trends and general business developments. His writing background includes The Huffington Post, World Finance and GuruFocus. His website is NashRiggins.com.

6 Reactions

  1. Aira Bongco

    The key is finding the right people to outsource your business to. This person should be an expert at what he or she doea and the person should have enough integrity to not abuse the control that they have over your business.

  2. Thanks for a thorough list. I’d be lost without outsourcing for two reasons.

    Number one used to be that I just didn’t have enough time to do everything that needed doing, but I’ve gotten more efficient at identifying what really doesn’t need doing after all. So now number one is that I can outsource what I’d rather not be doing, due to either lack of competence or lack of interest. Sometimes those necessary but unpleasant (to me) tasks take me away from doing what I actually went into business to do, and other times I’d just rather admit I hate them and let someone else have the aggravation.

    Number two, everybody who hires me is outsourcing, so I like that. 🙂

  3. Couldn’t agree more. Probably the biggest advantage is the number 5. You Can Reduce Costs. Also as Aira Bongco mentioned, the key is finding the right people to outsource your business to so that quality is not compromised. You can balance between these if you hire someone qualitifed who lives in a place where average labor cost is lower like India. In this case recommendation from someone, maybe a friend, who has been benefitted from him.

    However, when it comes to outsourcing, I always companies instead of individual freelance service providers. Freelancers often lack commitment and more often skill which often lead to quality compromise, even time waste, and project failure. On the contrary, companies are committed to providing best services, they also come with two options, you may choose a virtual assistant from them or assign the company project as a whole. Company always try to maintain quality at its best so that their reputation isn’t damaged.

    When I needed to get my site’s articles written, I hired a virtual assistant from Staff India following suggestion from a friend who also got his writing done by them. I saw how much those companies value reputation and so maintain quality service.

    Again, thanks to the writer, really helpful article. I wish I knew these facts before.

  4. Outsourcing has helped businesses focus on their core functions while letting professional outsourcing companies that provide BPO services to take over the everyday tasks. Tasks as important as customer service and customer retention are being handled by third party companies that are giving excellent results and flexibility to your business.

  5. Really good article! I would like to add some more advantages of outsourcing, with some detailed listing:
    1. Focused strategy – sometimes your development team may have problems managing lots of projects. By picking outsource software development you won’t have to worry about this, as outsource team will focus entirely on the project you provide.
    2. Time savings – outsource software development process is usually much faster than in house one.
    3. Bringing in fresh perspective – as simple as it is, if you add additional members to your team, you will surely hear new perspectives.
    Nowadays there’re many software outsourcing company in Vietnam like PowerGate,..and I think Vietnam has some advantages to develop software outsourcing such as profession skill, labour, environment,…

  6. Nice article.

    Biggest advantage of outsourcing is cost cutting and getting service of expert at very competitive rate.

    Hiring and selecting employee is time consuming and costly. Moreover, you need to have space and facilities for new employees.

    Outsourcing is not limited to start up or small businesses. Nowadays, well established companies also prefer outsourcing and reducing the cost.

    With some safety steps, outstanding is the best option as per me.

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