The pros and cons of outsourcing for small businesses

As a business slowly grows, one of the ways to achieve higher efficiency for a lower investment is to turn to outsourcing, as we reveal in this piece.

Small businesses are an important part of any country’s economy as they are often crucial providers of jobs. Even though the term small business may mistakenly give the wrong idea to people that these businesses aren’t that significant, economy experts are quite aware of the complexity of this business concept. As simple as managing a small business may seem, there’s no such a thing in the highly competitive markets that try to reach as many customers as possible. Therefore, as the business slowly grows and expands, one of the ways to achieve higher efficiency for a lower investment is to turn to outsourcing.

In the past few years outsourcing has become a very popular as well as commonly used term; generally speaking, outsourcing is assigning certain company processes to businesses or subsidiaries located in foreign countries. After all, many processes, if not all, can be done remotely and don’t necessary require physical presence in the country of operation. For example, online gambling operators such as can outsource their entire customer support team, while online media can hire remote content writers. Naturally, the list of options may go on and on since departments like HR, marketing, customer support and even sales (online, phone etc) can be successfully outsourced.

There’s no shame in outsourcing and numerous small businesses have already implemented this concept into their every day operations. However, as good as it sounds, outsourcing is far from a perfect solution to all problems; quite on the contrary, this concept comes with both advantages and disadvantages. Therefore, rather than just jumping into a conclusion that outsourcing must be good for your business, it is much smarter to first consider certain pros and cons that should help you decide whether outsourcing would be the next logical step for your company.

Pros of outsourcing

Let’s start with the most obvious one – lower labour costs and therefore higher profits. There are lots of professionals around the world that are ready to do a job quite good for much less money; therefore, outsourcing an entire department or maybe a few minor jobs will be saving you money and time. Since time was mentioned, freeing the time of managers is yet another pro of outsourcing; this means that they will have more time for creating growth strategies and focus on the general improvement of the business.

Additionally, when you outsource you’re, in a way, transferring all obligations related to that department to a contractor; as a result, you don’t have to hire new employees into the company and have serious obligations towards them. Plus, you only tell the contractor your expectations, needs etc. and the rest is organised and managed offshore. This leads to another important advantage of outsourcing – better quality and increased speed of the activities. You simply get the final result, while everything else falls to the other party.

Cons of outsourcing

As it was mentioned, outsourcing is not the perfect concept and often what can be a real advantage may turn into a disadvantage. For example, better quality and increased speed of activities are often the major pro of outsourcing, but also the major con. Namely, finding a contractor that can meet all your needs and expectations is not always an easy task. Therefore, sometimes you may collaborate with a contractor whose employees cannot deliver high-quality services or products; consequently, instead of a good investment, outsourcing may turn out to be pointless spending of cash.

Another thing that small business managers would certainly want to avoid is losing control over the crucial processes of the company; yet, this can easily happen when many of the departments are outsourced rather than operated within the company. Moreover, not only the control over the process can be lost, but also the control over the people completing the tasks. You won’t be able to overlook how things are done, whereas implementing changes may be harder than usual. Naturally, this highlights another disadvantage of outsourcing, which would be communication issues. Sometimes, the contractor may work in a different time zone or not have a stable Internet connection. All these issues can lead to bad communication, which can, naturally, lead to overall dissatisfaction for you as well as for your customers.

Final thoughts

All in all, whether outsourcing is the right move for a certain small business depends on many factors; for example, it’s important to find the right people so you can be sure that the tasks will be done impeccably and on time. Also, it’s important to find trustworthy partners with whom you will be able to have open and smooth communication. After all, outsourcing is all about saving money and time; therefore, if you cannot find high-quality labour for the right price, it may be better to just hire new employees that not only will be good workers, but also a true part of the company.

Further reading on outsourcing

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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