Advantages and risks of outsourcing
Outsourcing has become a very common word in the past one or two decades. Outsourcing means transferring the daily business management and execution completely or partly to an external service provider. When an outsourcing contract is signed the two parties enter a contractual agreement that lays down the services that will be transferred by the client company to the supplying company. The outsourcing company is generally referred to as the client and the service provider company is referred to as a supplier.
The major idea behind outsourcing by all accounts and trends is lowering the cost of operations on the part of the client company. The main businesses that resort to outsourcing are – IT, HR, Finance, Customer care, Telemarketing, data entry and market research. There are constant additions to this list since a company stands to gain quite a bit by outsourcing its work and services.
The benefits and advantages of outsourcing are generally known but there are also some risks attached to it. For example there is always a fear of fraud occurring at the end of the supplier. There is also a fear of delay in the delivery of services and products which can result in a substantial loss of money and reputation.