The disadvantages to outsourcing can far outweigh the money-saving benefits if outsourcing isn't the right solution for your company. When you consider what outsourcing costs, it may not make much sense for your particular situation. Before you sign on to outsource any of your business practices, you may want to take these disadvantages into account.
Outsourcing Can Lead To A Loss Of Control
When you outsource essential parts of your business function, you are giving away control with that part of your business. Although you will have a contract in place, the outsourcing company may not have the same standards or policies that you do with regards to the quality of work that is achieved. There is always risk associated with outsourcing because you may not receive the quality of work you are expecting.
Outsourcing Can Lead To Hidden Costs
Although your contract with an outsourcing company will have details on the fees that you should expect, there may be hidden fees that you may not think of. For example, with payroll outsourcing, you'll often have monthly fees that aren't specified in the contract based on the amount of checks being cut. You will often also have to pay for a lawyer to go over the contract to make sure that you are being protected completely.
Outsourcing Can Put Your Company At Risk
Whenever you let other parties see what is going on with your company, you are putting yourself at risk. The security and integrity of your company may be comprised by a subordinate at the outsourcing company who does not have the same ethical standards of your staff. This is especially important to consider with payroll, medical records and any confidential information about your clients that you are passing on to the outsourcing company. You need to be sure that the company you are working with can be trusted with this sensitive information.
Outsourcing Can Tie Your Company To The Financial Well-Being Of Another Company
When you outsource too extensively, your business depends on the financial well-being of the outsourcing company. If you expand beyond your means too fast and end up having a company that is completely relying on outsourcing in order to stay afloat you'll be completely at a loss if that company goes under. Imagine having to rebuild your structure from the ground up at a moment's notice. When you outsource, you could very well be facing this problem.
As you can see, outsourcing is not without its disadvantages. You should go into an outsourcing situation only if you are completely sure that it will be a good thing for your company and you can reduce the effects of these negative aspects.