Effects of Outsourcing The use of outsourcing has become commonplace in todays business arena. The basic definition of outsourcing is transferring of service and/or production to an internal or external company.

* No Outsourcing- The operations performed day to day are highly unique to an individual business and vital to marketing believability. An example would be a college or university.

While outsourcing operations has its benefits, there are reasons why a business

should carefully examine the disadvantages it may present. One is the loss of managerial

authority. It is much easier to manage employees in house than it is to manage an

outsourced service provider. Outsourcing does not eliminate management

responsibilities, it simply changes the nature and level of responsibility. It is also

possible to lose sight of day-to-day operations while focusing on coordinating contracts

with an outsourced company. Add to that the legal fees that will be incurred for putting

together these contracts. The main reason to outsource is to reduce overall costs and any

hidden fees may affect a business' bottom line.

Another disadvantage that should be taken into consideration are security and

confidentiality concerns as they pertain to payroll, salary information, etc...Generally,

the amount of money each employee earns is not widespread knowledge. If employee

salaries are leaked that could cause some discord within the workplace. When a

company insists on outsourcing the process of payroll, they must be very discriminating

in their choice of providers. It must be handled only by people who are trustworthy in

handling such privileged information.

When operations are handed over to an external party the likelihood of decreased

employee morale becomes a greater possibility. Employee talent that has been generated

within a business will tend to get discouraged if they are ignored in favor of someone

outside of the company. Someone who has worked for a company for a long time can

understand certain business issues and will be better equipped to handle them more so

than an outsourced party. If they are not called upon to handle business matters that may

arise, their growth is stunted and they may feel as if they are not an important entity.

Their quality of work may suffer because of this notion or because they rebel against the

organization. Either way, this could result in the loss of quality employees which could

in turn end up costing the business more financially.

The sum total of all of the disadvantages listed above basically boils down to

sheer loyalty to the organization. If operations are outsourced to an external group, their

devotion is only to those who sign their paycheck. There simply is no familial

environment culminated through years of work with a company. This is a very important

factor as trust issues are involved and outsourcers must be carefully scrutinized before

services are rendered. It is also crucial that internal employees are not overlooked to

handle the organization's affairs. If solid employees are lost because of outsourcing, the

business will suffer for having to hire and train new ones which may or may not be an

asset to the company.

As you can see, the decision to outsource is not one to be taken lightly. So many

facets of this process must be taken into consideration before doing so. Outsource

facilities must be aware of the strategic mission of your business or they will not engage

in activities to promote that mission. Know exactly what needs to be outsourced and

what can be taken care of by personnel within the company. Do they offer you more

expertise that what you already have in house? Finally, you must have a keen

understanding of your budget goals and whether or not outsourcing will help you attain

those goals or end up costing more in the long run. The big picture of costs and expenses

in terms of money, assets, and talent must be taken into consideration before making the

leap into outsourcing. If they are not, it could cost you much more over time than simply

keeping your operations within your organization.

Works Cited

"Advantages and Disadvantages to Outsourcing." Outsourcingsurvival.com. 9 Oct. 2007. <http://www.outsourcingsurvival.com/OutsourcingAdvantagesandDisadvantages.html>.

"Disadvantages of Outsourcing." Softwareprojects.org 10 Oct. 2007. <http://www.softwareprojects.org/disadvantages-outsourcing.htm>

Dove, Rick. "Outsourcing Knowledge Work-Why Not?" September 1999. Paradigm Shift International. 10 Oct. 2007. < http://www.parshift.com >.

Hira, Ron, and Anil Hira. Outsourcing America: What's Behind Our National Crisis and How We Can Reclaim American Jobs. New York: AMACOM, 2005.

Brown, Douglas and Scott Wilson. The Black Book of Outsourcing: How to Manage the Changes, Challenges, and Opportunities. New Jersey: Wiley, 2005.