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What are the Advantages and Disadvantages of Outsourcing

Outsourcing A Division


Outsourcing is usually performed in every organization among different organizations these days. This is an elementary strategy of organizations for a substantial period. The company hires employees from any other organization in a business practice. They handle some operations and perform few tasks, which the company’s employees have already performed. The company from which an organization hired employees is known as third-party provider or service provider.  The term decision making refers to the judgment between right or wrong, between easy and difficult. With little focus and concentration we can implement a strong ancient decision in an organization and leads the project at the height of success and fame.

They arrange employee’s new employees for hiring. Most of the times service providers arrange the facilities and resources at its own behalf. Companies outsource for a number of specific tasks to perform. Most of them include IT services, manufacturing processes, human resources tasks, financial tasks such as bookkeeping, payroll etc. Most companies outsource whole of its departments but some outsource only one or two departments of their company.

What are the Advantages and Disadvantages of Outsourcing

It totally depends on the company strategies and policies or at their will as well. Outsourcing is also called as contracting out. Outsourcing in an organization is done to lower the costs and expenses of the company. It also improves the efficiency of working of that company. It also enhances the working speed and development speed of the company. (Rouse)

Companies that decide to outsource their company relays on the third party provider for hiring and efficient working. However, companies may outsource for other reasons as well. The organizations which outsource their projects can attain a confirm success with efficiency and accuracy. If an organization realizes that they are losing control over their aspects, they must outsource their company. Companies that outsource have a very high risk in it. The company shares his most sensitive and secret data with the third party provider employees.

The company also can have such issues that their old employees may not collaborate properly and efficiently with one hired employees of the third party. The outsourcing Is basically have convention issue in it. First, this creates a sense of fear among the employees that they may be fired from their job. This happens sometimes that outsourced employees are very much efficient and loyal that they are permanently hired by the organization.

The outsourced companies may face a negative criticism from the public also with which they are linked indirectly. The old employees may move to some other organization due to some wages problem, atmosphere problem, strictness problem etc. To resolve these issues companies can in source their organization. As the name is showing it refers to a system that companies did in-house function performed by their own employees. This may lessen many problems, which came because of outsourcing.

Outsourcing is not a new phenomenon in the organization. It establishes and develops the starting of a new project and strategy for the organization. Outsourcing provides the facility of mobilizing its resources and directs them to develop new characteristics in the organization. Outsourcing is done for the main reason of cost reduction, improving organizational focus, making most things become possible, free internal resources to perform. It also accelerates the benefits of re-engineering, capital injection, sharing of risks, driving expenses for some extra tasks etc.

Outsourcing allows the organization to keep an eye on the most valuable and important projects of them. It reduces the cost of heavy and very expenses projects of that organization. It also leads to less variable costs and financial costs of that organization. It leads to emerging of new and extraordinary talents because every person has a different mindset. It results in better quality and efficiency of work in that organization.

If the organization, which is resourcing from other, has a risk in any of its project, it can be transferred to that organization where it has no risk. Outsourcing also helps management in their working and implementing decisions. Outsourcing lowers the risk of freezing of capital at the time of any problem. It improves the control of organization on internal departments. It gives access to external competencies.

It increases the flexibility and ability to meet fluctuations in demands of the organization’s project. It is difficult for small businesses but with a contact in large businesses, it improves their working efficiency too. It can make customer or employee happy and satisfy the working of the organization. It improves the measuring cost of that organization.  Outsourcing results emend and betterment of organization’s overall atmosphere in terms of working.

Outsourcing has many advantages in an organization as I discussed above. There are also several disadvantages of outsourcing in any organization. The organizations from which an organization outsources them become dependent on them. At the time of delivery of projects, it may be delayed due to the late working of employees hired from the third party.The quality of work may suffer due to the mixing of different opinions of two-organization working together as outsourcing. (Satyendra)

Different minds have different ideas this will disturbs mostly the working efficiency of that project. This often requires the effectiveness of work on that project and decreases the efficiency of neatness of project. There are many costs may affect the financial budget of the organization.  This outsourcing may increase the budget of the organization. There is a loss of knowledge related to the project because of conflict of different opinions of different people.

There may be a risk of the dishonesty of the third party provider to the resourced organization. There may be also a risk of damage to the reputation of the company. The company with which an organization outsources them may have lack of knowledge. The third-party organization may be of a bad reputation, which may also damage the reputation of that company.

The normative or descriptive theory is related to the term, which helps in identifying the real decision to be implementing at the organization. The decision, which should be according to the company policies, should be according to the project policies of the organization. A good perspective decision must have these 4 points when implanted in an organization.

The decision should be according to the formula, which is needed to complete that project efficiently. The problem should be identified first so that proper solution should be done. The problem should be done as it will be completely solved and never happened again. The pre-solution of the problem should be made so that before implemented it can be checked. Then finally, the decision should be implemented in a way that it gets fit according to the problem solution. (Weber)

There will always be taken into account that main issues of the problem should be noticed so that the problem should be solved properly. A perspective decision making is a method, which can only be used by the person who really can implement the decision. In this method, the decision maker should be aware of both the specific situation of implementing a decision.  Descriptive models based on the ideas that people implement in their daily life. The perspective decision mainly focuses on how we implement a decision. (karasuski)

The normative decision includes the set of rules and regulations that when implemented will bring confirmed results. Whereas descriptive decision based on the principle of implementation of the decision of people in their daily life.

Critical thinking is actually a way of analyzing the information related to implanting a decision that you gathered. That information should collected after passing through all the proper processing of collecting information steps.  This thinking is usually based on the rules and steps followed universally by all the decision makers. Critical thinking is a self-made thinking of a person regarding to the decision he is about to implement. I believe that critical thinking should be implemented on a decision that helps to see the other sides of the implementation of the solutions of the problems.

In both the decisions, it is showing that the solution should be what and how. In addition, it implements us how this decision will work in future. How much this decision is useful for the project of that organization? Critical thinking lasso depends somehow on the backed support and motivation of the organization’s heads. If they will support the implementation of the decision maker. Encourages he / she for their working then, it will be helpful and appreciating for the decision maker.

The decision affects the working and overall behavior of an atmosphere of an organization. It directly depends on the employee’s negative and positive nature of employees that how they accept that decision. The decision should be such that a maximum number of employees should get satisfied with the decision. The decision should support them warmly in their working strategies and rules of the organization.


In an organization, while implementing a decision there should be a fare policy followed by the decision maker. For a complete and better understanding of decision-making, one should first understand the ethics and fairness of implementing the decision. The fair decision enhances and boosts the morale of employees. This type of decision makes employees more comfortable in their working. They trust more and more in the organization that their loyalty would be appreciated here.

The solution will be permanent so that problem will not occur again. The project strategies should enhance business reputation and creates good will of the organization in the market.

You may also study:

Is Outsourcing Good or Bad

Business Outsourcing Benefits With Example of Apple Analysis

  • karasuski, Adam.Research gate. 2015. <https://www.researchgate.net/post/What_is_the_difference_between_normative_and_prescriptive_decision_making_models>.
  • Rouse, Margeret. Tech target. n.d. <https://searchcio.techtarget.com/definition/outsourcing>.
  • OUTSOURCING – A MANAGEMENT TECHNIQUE. 16 May 2016. <https://ispatguru.com/outsourcing-a-management-technique/>.
  • weber, Alke U. Researchgate. April 1990. <3113723_Descriptive_and_Prescriptive_Models_of_Decisionmaking_Implications_for_the_Development_of_Decision_Aids>.

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