Outsourcing

As my co- blogger- Prashant ( http://enigmaticpieces.blogspot.com/2008/12/outsourcing-way-of-life.html ) has aptly defined outsourcing as a way to maximaze output and optimize the use of available resources, however on reading so, my mind began thinking in a direction that would prove the trend of outsourcing not only a cup that would  not be sweet for all kinds of companies but also prove to be dangerous in these times of financial crisis such as these.

As the tides have changed with the oncoming financial crisis, outsourcing, earlier an asset can now prove to be a dangerous arm that can be servered if the crisis serves as a severing axe.

Many companies, especially large comapnies with a consequently large workforce tends to outsource certain activities that work out cheaper, such outsourcing costs are further reduced by giving contracts to companies that are SMB'S.  it is this factor that poses a threat in the economic situation of 2009.

Although outsourcing has many multi-faceted benefits, it at the same time has cons that can not be ignored, these are what I want to point out, and leading on from there it is important to assess whether or not outsourcing is suitable for companies in all different fields.

Firstly a heavy dependance on another firm for your outsourcing causes the parent company to be vulnerable, because if the outsourcing firm cuts on their activities, the parent firm will suffer, this factor is especially applicable to the present times where there is a chance of the company to go bankrupt and stop its services, and that may cause for an arm of the parent company to become immobile.

Secondly, outsourcing requires the control of the process being outsourced by transferred to the service provider. thus a company can loose control over its process. This is ofcourse applicable in companies that require a precedure to be followed, that is as important as the end result, and for companies that want direct and strict control over processes.

Thirdly, there is an indirect threat felt by the employees that can cause problems in output of individuals as they feel threatened by the outsourcing company.

Fourthly, a valid and important point is from the view of ethics, where a company that has many different outsourced units, will tend to take the services of the labour of the developing nations as opposed to their native nations. This is unfair and it also causes loss of employment opportunity in the home country. 

Although the third and fourth problems are manageable, it is the first two that one should be weary of and must take all precautions to plan ways to back up their productions units internally if required, or a large company may suffer.

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