Pros and Cons of Outsourcing: When is Outsourcing Right for Your Company?

Outsourcing has gotten a bad rap in the media – mostly because people automatically think outsourcing means shipping jobs overseas to other countries. However, if you’re really struggling with a project and don’t have the resources to complete it properly in house, there are domestic companies you can choose to partner with. When is outsourcing right for your company? Finding the right outsourcing partner could be incredibly advantageous in the long run, both financially and professionally. It’s also often less expensive than hiring a full-time expert and can yield better results faster.

Outsourcing_Jyot_QuoteOffshore outsourcing isn’t all bad. Non-domestic outsourcing has its place in the U.S. economy. However, common outsourcing concerns, such as security and protection of trade secrets and intellectual property, can become big issues when dealing with a company that operates outside the jurisdiction of U.S. law. You won’t have as many options for going after people who violate your non-disclosure agreement, and those options will be expensive.

Sometimes the adage “you get what you pay for” can apply to the quality of work you may get from offshore outsourcing, depending on what services you’ve contracted. Cultural, language, and time-difference barriers can interfere with the efficiency of work, too.

When RTS Labs Founder and CEO Jyot Singh was asked to weigh in on domestic versus offshore outsourcing, he said, “I am such a big believer in collaboration being kept in the U.S. There are certain things that just work better when working with domestic business partners. There’s a better cultural awareness of workflow, legal matters, and respect for intellectual property. Anecdotally speaking, the quality of the work has always been better from our domestic outsourcing partners.”

Jyot also points out that where you take your outsourcing may depend on what you need to have done. “For something like prototyping, in-person collaboration is essential,” Jyot says. “When you’re building out a product that starts as an idea on a napkin and then taking it through the process of iteration and learning, trying to track user acceptance and eventual adoption, this kind of work is a perfect fit with domestic companies. If you’re looking for help with maintenance or support processes, companies outside the U.S. that have been properly vetted may be just as good of a choice to handle your workload.”

Whomever you decide to partner with, here are some of the pros and cons to consider when you find it’s time to outsource some of your most pressing projects:

Pros:

  1. Fill in the gaps for less money. Hiring consultants or an agency for assistance with a specific project can help to fill in the talent or skill gaps on your own team. It can be difficult (read: nearly impossible) to hire a full-time person for every skill set you’d ever need, especially for technology projects. And it may not make financial sense to hire a full-time subject matter expert if you only need them for a few months out of the year. Outsourcing projects to a firm or individual gives you access to the skilled work you need to have done while keeping costs down.
  2. Keep your focus. Outsourcing projects can help you to stay focused on your company’s primary work. If you make widgets, but then a good chunk of your team gets distracted by an important but non-primary task, such as prototyping widget holders and other accessories, who’s keeping up with making and improving your main widget products? When a project pulls too much attention from day-to-day business operations, consider finding a trustworthy team to outsource the project to. (The prototyping teams at RTS Labs have found this to be especially true with small and even mid-size startups that have limited numbers of employees.)
  3. Speed it up. If you’ve got a business-critical project on your hands, hiring additional resources to get it done quickly and accurately can literally be a gamechanger. Outsourcing to a trusted, reliable vendor or agency can help you to make critical deadlines and even get product to market before your competition.

Cons:

  1. Security and control. Whenever you turn over your business processes and information to a third party, you are no longer totally in control. Unfortunately, partnering with an outside firm means you’re trusting them with your security and intellectual property. If, for example, the firm you hire has a data breach and compromises your data, you can still be liable for the damages. You can have non-disclosure agreements in place to help guard against theft of intellectual property and to have recourse if such a theft should occur. However, such recourse may not be enough, depending on the fallout if your trade secrets are leaked – intentionally or unintentionally.
  2. Customer alienation. This point applies more specifically to outsourcing customer service, although it could happen even in other projects, such as product development or marketing, if you hire outsourced partners who don’t truly understand your audience. Depending on the service or project you’re outsourcing, you may be losing control over the quality of that service. If a customer leaves because they were treated badly on the phone from an outsourced call center or because your new batch of products aren’t up to the quality of your flagship products (to name a couple of examples), it can be hard to win them back. Another way you could alienate your customers is if they are against offshore outsourcing and find out you have outsourced work to a company overseas. They may not want to support your company anymore.
  3. Training and knowledge. How well does your outsourcing partner know your market, your industry, and your business? And how long will it take them to get up to speed? The answers to these questions are even more important in specialized industries with specific regulations and privacy concerns, such as healthcare and finance, including the mortgage industry. If it takes too long for a consultant or firm to get up to speed with your project, then you’re wasting time and money. If they don’t have enough knowledge of industry-specific concerns and regulations, then you could end up with an inferior product – or even end up violating certain regulations or privacy statutes.

So, how can you make sure you’re choosing the right outsource partner for your project? Ask potential companies:

  1. Have you worked with clients who are similar to us?
  2. Have you worked on projects like the one we need help with?
  3. What qualifications and certifications do your individual team members have who would be working on my project?
  4. What do you know about regulations in my industry?
  5. What sort of protections do you have in place for guarding my trade secrets and intellectual property?
  6. What sort of security do you have to guard against data breaches?
  7. After scoping out this project, what questions do you still have or do you think I should be asking? (There’s nothing wrong with flipping the tables on them and picking their brains.)

In weighing your need to complete a project against the risks to security or quality, you should be able to decide if outsourcing a project or service is right for your company. If you decide outsourcing is the right choice, then it’s just a matter of choosing the right company whom to partner with to get your project off the ground.

The benefits to your company can be substantial when you outsource work. You can meet timelines faster. It’s possible to get top-notch work without paying a full-time salary and benefits. And it frees you up to work on other things that demand your attention. Make sure you choose your outsourcing partner wisely and put common sense safeguards in place to protect your data and trade secrets. Then, you can reap the full benefits of outsourcing business-critical work to outside agencies.

Have follow-up questions about outsourcing? Feel free to contact the teams at RTS Labs through our Contact Us page.