Outsourcing - these are the advantages and disadvantages

If a company needs a certain service or does not find it profitable to set up an internal department or hire a person for certain activities, it can resort to outsourcing. This is a strategy that can be more or less advantageous depending on the company, and so in this article we examine the pros and cons of outsourcing.

Was ist Outsourcing?

Outsourcing is an English word that results from the combination of two English words: "out" means "outside", and "source" means "source", which literally means to draw on an external source.

A company commissions an external party to provide services or manufacture certain goods that the company would normally provide or manufacture internally with its own resources, thus delegating part of its work. This allows the company to focus on the most important processes in order to reduce costs that would be much higher if hired internally, or for external specialists to take over the work in a specialist area.

Depending on its strategy and needs, a company can outsource certain tasks or services, these are very common examples:

• Commissioning an accounting service with an accounting firm instead of hiring an accountant;
• Commissioning a company specializing in human resources to select candidates;
• Commissioning a software development company instead of the entire internal IT department;
• Commissioning a marketing agency (or a specialized expert) instead of or in cooperation with the internal marketing department.

Advantages of using outsourcing

A company can resort to outsourcing if this is favorable to its conditions, quality standards, costs and deadlines. Some advantages of outsourcing are:

Cost reduction

Hiring internal employees entails high costs, especially when it comes to individual tasks or tasks that are not absolutely necessary for the company. Outsourcing certain activities where an external company may have more experience and efficiency leads to a reduction in in-house costs.

Access to modern technologies

Outsourcing professionals who specialize in certain activities entails access to common technologies. Otherwise, it would mean more costs for your company than the associated profit. As a rule, most outsourcing agencies have mastered the latest trends, which they can introduce into your project.

Access to qualified workers

Outsourcing can also be an alternative if the company cannot find qualified workers with the desired experience for internal recruitment on the market.

Concentration on core tasks

By outsourcing and delegating tasks to third parties that provide the same (or in most cases higher) level of quality, your organization can focus human resources on core tasks, increase productivity and efficiency, and improve the end product.

Reduction of production and delivery times

Since your company concentrates on its main tasks and a specialized third-party company takes care of the rest, for example the implementation of your e-commerce project or integration with an ERP or PIM system, production times can be shortened and products or complete services can be delivered faster. Delivery is very important in online retail, you can read more about this in our article here.

Savings in employee training

As a rule, new employees in organizations are trained with regard to the corporate culture and the work itself. Outsourcing their tasks saves this time and therefore money, and you don't have to worry about mandatory training times when outsourcing, as these are the responsibility of the contracted company. find out more about the advantages of outsourcing in Ukraine.

Disadvantages of using outsourcing

Despite several associated benefits, resorting to outsourcing can carry some risks.

Less control over tasks and deadlines

Outsourcing an activity implies trust in the agency, but it also implies that there is not much control over the tasks and their quality and delivery times. That's why you have to choose an outsourcing agency correctly. We have written an article on this topic: "How to choose an e-commerce agency?"

Communication difficulties

Somewhat related to the previous point, especially when the work is done remotely - and even more so when it takes place in different countries - there are sometimes communication issues that are almost non-existent with an in-house team, as the in-house team is already used to internal processes. This can sometimes lead to longer deadlines. To avoid misunderstandings at the language level, look for an experienced agency with specialized staff that can provide outsourcing consulting and other services at a high level.

Legal issues

In order to protect the commercial interests of each party and to try to enforce the agreements, it may be necessary to resort to contracts with defined terms, which requires time and control.

Data protection

Depending on the activities, data may be passed on to third parties. Even if only essential data is transferred, there is always a risk that the third party will not comply with the standards for the protection of confidential data, and it is very important to add confidentiality agreements to the service contracts to ensure data security (prevention of theft, disclosure of information, etc.).

Dependence on the third-party provider

There is the possibility that the contractual partner will not deliver the product or service within the deadline or even abandon the completion. One of the ways to reduce all these negative aspects of outsourcing and avoid risks is to use the so-called Dedicated Team Model. This involves drawing up the contracts correctly and finding a reliable agency to provide the Dedicated Team.

Are you interested in a Dedicated Team?

KennerSoft is an experienced German agency for e-commerce with two development offices in Ukraine and Germany and sales offices in the USA and Taiwan. We specialize in web development and integration. We also create online stores, web services, B2B portals and marketplaces. We use the following technologies for individual software development: Shopware, OXID, Magento, EspoCRM, KennerPIM and others. We also offer high quality onlineshop consulting and further support for your project, and our dedicated team takes care of the quality implementation of your projects with the highest standards of performance, design and user-friendliness. Our references tell you more about us.