Pros of Outsourcing for a Small Business
Outsourcing is an excellent way by which small businesses can save money irrespective of whether one requires individuals with a specific set skills to help out with the running of the business or someone who can simply help with managing all the additional workload that a particular business or enterprise is faced with (Bennett 1). Outsourcing is in essence a well-known and conventional business practice that companies take recourse to in order to improve efficiency levels or reduce expenditures. The process of outsourcing involves hiring third parties off site for a specific period of time and on a temporary basis to perform certain functions, tasks and operations (Belas et al. 1). This report analyzes the pros and cons of outsourcing as it relates to small businesses. The report concludes with the argument that outsourcing tends to do more harm than good for a small-scale business enterprise and must be implemented after a lot of consideration and care.
One of the most well known benefits associated with outsourcing for a small business is the fact that the costs involved in doing so are quite low. One does not have to spend a fortune in order to outsource business tasks and operations to a third party. If business operations are being outsourced globally, then there is every chance or opportunity for that business to benefit from the reduced cost of labor (Broeckmier et al. 1). A worker in a developing country will charge far less than what a laborer would in the developed countries of the world, especially in the countries of the Global North. Outsourcing also provides a business owner with the scope of getting a number of tasks completed on time without having to make any investment whatsoever in any long term employment (Burns 1). The owner of a small business who is thinking of outsourcing business operations to be done by labor overseas, will not have to hire full time laborers and provide them with benefits like a provident fund or gratuity or any other type of social security scheme. Such an employer will not be under the pressure of hiring and retaining permanent laborers even when the business is not doing well and profits are not too high. The reduced cost of labor and the ability to avoid hiring labor over the long term are two ways by which small scale business owners can definitely save plenty of money by getting business operations outsourced to third parties in other parts of the world, preferably in the countries of the Global South (Cucculelli et al. 329).
Hiring employees at all is something that small-scale business owners can avoid alltogether, when they take the decision to outsource business operations instead of carrying out such operations in the confines of a city or town in a given part of the world. Since the cost of recruiting employees is something that is quite substantive, business owners get to save a considerable amount of money by avoiding the hiring of employees and outsourcing the work of the business instead to freelancers or temporary workers in other parts of the globe who can get the job done at half the cost (Donnelly et al. 422). A number of additional expenditures can be avoided when outsourcing business operations. Additional pay, paid holidays and numerous other benefits that are made available to permanent staff like sick leave or medical cost reimbursement can be easily done away with when business operations are outsourced. There are very few responsibilities that a small business owner must face or deal with in the event that outsourcing is done. Running a small-scale business that is run by full time employees is something that can turn out to be very stressful, given how demanding employees can be, especially when it comes to asserting their rights and privileges. Unionism, staff strikes, bad behavior on the part of staff are issues associated with business operations that can be avoided in a smooth and hassle free manner by owners of small-scale businesses who take the decision to outsource business activities to other parts of the world instead of recruiting full time employees for this purpose (Edwardson et al. 30).
Avoid Recruitment of a Full Time Labor Force
One of the best reasons why the owner of a small business should outsource business operations instead of getting these done by full time employees is because of the hugely talented pool of labor that such an employer gets to access upon doing so. Laborers in developing countries of the world may charge less for the work that they do but this is not to say that they are less skilled than workers in the developed world (Flynn et al. 443). The countries of the Global South in particular are infested with talented pools of people who are desperately in need of employment and who can get business tasks and activities carried out without making too many demands or without asking too many questions. Most of these working professionals are willing to work as many hours a day as may be necessary in order to get the business tasks done quickly and easily, as long as they are paid on time, without any delay. So when the activities of a small business are outsourced to other parts of the world, the business owner not only gets to avoid spending what he or she would if hiring skilled employees from the developed world, but gets to benefit from an equally talented if not more talented labor force that is willing to work night and day to get the job done, just to please the person who has chosen to outsource the work to them in the first place (Gielnik et al. 460).
Outsourcing is an activity that can definitely bring down the pressure levels for the team that is associated with the primary operations of any small-scale business enterprise, especially if this is a team that is focused on performing extra tasks while focusing on their respective duties at the same time (Hatten 1). Expansions in business operations or heavy workload is something that is likely to affect the staff working for any enterprise, be it a large scale business or a small business. When business operations are outsourced to other people in other parts of the world, this reduces the pressure on the staff working for a small-scale business enterprise by a considerable degree. Menial and time-consuming tasks no longer have to be carried out by the employees of a small business or by the business owner himself if the bulk of the business operations are outsourced to laborers elsewhere. Outsourcing is something that the owner of a small business should therefore definitely consider worth doing, if he or she wants the staff of the business enterprise to be healthy and happy instead of being overworked, sour and lacking the motivation that is needed to do good work. When the operations of a business are outsourced, it will definitely help in keeping the staff of the company relaxed and happy and will result in good work being done for the company in the long run. The stress and the anxiety of running a small business enterprise will be reduced considerably when the work of that business enterprise is delegated to talented laborers in different corners of the globe (Hossain 6).
Benefit from Accessing an Enormous Pool of Talent
Dealing with inefficient and unproductive staff is not likely to be a problem any longer when a small business owner outsources business operations to people in other parts of the world. It is likely that the staff of a business enterprise can lag behind in work when this staff is de-motivated or when there is work place discrimination etc (Klimovets et al. 193). However, when the work is being outsourced, the individual who takes up the responsibility of doing the work will get it done as quickly as possible in order to be paid at the earliest for doing the work. The onus will be on this individual worker to get the task done quickly and in the best possible way in order to receive more work from the small business owner once again. Hence, in this way, the small business owner will be able to race ahead in accomplishing business goals by getting all the work that is related to the business done on time, or done well before time (Lu et al. 601).
There are a number of cons that are associated with outsourcing operations for a small business enterprise as well. Communication for instance becomes really difficult to do for the small scale business owner who is outsourcing all of the work (Mageta et al. 11). The owner of the small business will definitely be able to get the work done for the business at prices that are far less than the usual. However, such a business owner may not be able to communicate the needs and the requirements of the business to the person who is taking up the work and who may not end up doing a thorough job because of such a lack in communication (Sharma et al. 590). As a result, much of the work that is done by the individual who was outsourced the work in the first place, may have to be redone at later date by another person for an extra amount of pay, resulting in a financial loss for the small business owner. It is therefore imperative, for the owners of small business enterprises to communicate exactly what it is that they want from the people who are being outsourced the work so that there are no lapses in this respect and the operations that are carried out for them are those that are a hundred percent correct and do not have to be re-worked or re-done at a later stage (Pearce 27).
Quality control is also something that the small scale business owner is not going to be able to exercise when outsourcing business operations instead of getting this done by a full time staff. Since the business owner will not be able to see the work being done for himself, in person, he will not be able to supervise or monitor the work, neither will he be able to hire a supervisor or a manager who will oversee the quality of the work that is being done. The business owner shall be in a position to supervise the outsourced work only after it has been submitted to him (Sonfield et al. 35). In the event that he is not happy with the quality of the work, there is not much that he is going to be able to do and will have to instead get the work done by someone else for an additional price. As a result, the small business owner will end up paying a lot of extra money and will not be able to profit as much as he could have. Hence the lack of any quality control or the ability to control the quality of the work being done is one of the many reasons why outsourcing the operations for a small business can be a very bad move on the part of the business owner.
Brings down the Pressure Levels for Business Staff
There are a number of hidden costs that can arise when outsourcing the operations of a small business. While outsourcing may seem easy to do at first, in reality this may not be the case and there may be plenty of liabilities that the business owner is faced with because of issues like hidden costs and expenditures, which end up being a huge drain on his budget. For instance, a small business owner may be in a position to get a lot of work done for his business at a reduced price when outsourcing the work (Verschoore et al. 152). However, if this work is not done up to the mark, the small business owner will have to get the work done by someone else instead, and will thus have to pay an additional amount of money to get the same work done. This will result in extra expenses for the small business owner, which is not desirable at all, even if the profits or the chance of making a profit are quite high (Burns 1).
A small business owner is not going to be able to exercise much control when outsourcing the work for a business rather than getting it done by a permanent and full time staff. Such a business owner is going to have to leave it to the person who is taking up the outsourced work to get the job done perfectly (Wang and Wang 1). The business owner will not be able to supervise or monitor the work or tell the person doing the job in details exactly how it is to be done. He will simply have to wait until the work has been completed by the people who have been recruited to do it overseas and will have to judge the merits and the demerits of the work once it has been made available for his viewing. In the event that he is not satisfied with the work done, he cannot do much but to ask for it to be revised, usually for extra pay, or he can outsource the work and get it done by someone else. All of this will result in the loss of time and money for the business owner. He will not be in charge of his own business operations and will have to rely on a person in a remote location to keep his business going the way that he would like it to be run. He will not have any say regarding the matters of his business except to approve or to disapprove the work that is being done for him.
The process of outsourcing the operations of a small business can also be quite a time consuming affair. The business owner will have to first decide exactly which are the operations of the small business that are going to be outsourced after which, a decision will have to be taken regarding who it is that the work is going to be outsourced to (Williams and Alvaro Martinez 1). A lot of time will go in deciding who all are going to receive the outsourced work for completion and by when they are going to be handing in all the completed work, done to perfection. Once all of this has been decided, the business owner and his management are going to have to take the pains of getting the entire set of operations explained to the people whom the work is being outsourced to, so that they are able to do a good job. The business owner will have to take a lot of care in this respect and make sure that all his needs and requirements are communicated well enough to the people who are being outsourced the work so that the work that is submitted to the small business owner is of the quality and the standard that he desires.
Decreases the Likelihood of Inefficiency
Conclusion
Thus, there are quite a few pros as well as cons that are associated with the outsourcing of business operations on the part of a small business owner. While the pros are definitely many, the cons are even more in number. When the small business owner outsources his business operations, he gets to save a lot of money, a lot of time and hassle, all of which is supposed to ensure profit and productivity for him and his enterprise over the long term. However, when he outsources his business operations, he fails to be in control of his business anymore. He is not able to supervise and monitor the work that is done for him, he is not able to see for himself exactly how his operations are being conducted and will simply have to be content with the work that is done. More often than not, small business owners have to pay a lot of extra money in order to revise or to redo the work that is done for them by the laborers whom they offshore the work to. This sets back productivity by a considerable extent and the small business owner ends up incurring more losses than he thought he ever would. Hence, while maintaining a full time workforce with benefits can prove to be quite costly and tiresome, a small business owner is likely to be better able to run his business operations smoothly when he has a full time staff working before him right before his very eyes.
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