Outsourcing isn’t a new business concept. It’s been around for decades, and the proliferation of Internet connectivity has made it simpler to outsource just about any job, save on the cost of in-house services, lower your business’ prices to beat the competition, and pay only for work delivered.
Using outsourced talent, your company doesn’t pay extras, which can add 25% to the cost of hiring a full-time employee. In other words, straight out of the gate, your company is up 25% on savings when you outsource.
So, what’s the downside to outsourcing? And which positions should you outsource and which should be kept in house?
The Downside To Outsourcing
For decades Australian businesses have employed temporary workers (temps) provided by agencies and services like Jobaroo, Adzuna, and Kelly Services. In fact, about 50% of Australian businesses employ temps for at least part of the year.
During holiday seasons, for example, retailers hire temporary floor staff, gift wrappers, delivery personnel, and others who ensure those gifts get delivered on time and safely.
However, hiring temps to fill in the gaps should be done with care and planning to avoid common problems companies encounter when outsourcing key staff positions.
It takes time for temps to get up to speed, lowering the business’ overall productivity. It can take a few hours or a few months to train a temp to do the job, and during that time your company is less productive.
When you hire temps from an agency you lose some degree of managerial control. Those temporary employees don’t work for you. They perform your work tasks but they’re employed by the temp agency, and that can lead to conflicts.
If you sign a long-term contract with a temporary employment agency you could discover hidden fees along the way. Always read the employment contract with care. Always keep in mind that the temp agency makes a profit. Your company contributes to that profit.
If the position provides access to sensitive or proprietary company information, an unscrupulous outsource can download that data to a flash drive and walk out the front door without you ever knowing you’ve been robbed. Temps don’t have a long-term interest in the success of your business. These employees are in the office, or on the factory floor, for a few days and weeks before moving on. Security should be beefed up when you employ outsources to protect company data.
The quality of work is often sub-par, not through any wrong-doing on the part of the individual temp. These employees often make mistakes simply because they aren’t familiar with office protocols. Mistakes happen. Sometimes costly mistakes happen.
Client ill-will and negative word of mouth are sometimes problems when using outsources to work directly with your client or customer base. The people and companies you service have certain (high) expectations. Meet those expectations and your client base remains intact. Fail to meet customer expectations and negative word of mouth (WOM) can spread through your service area or business sphere in no time.
Now you have a reputation problem to solve.
In the next post we look at minimising the risk of outsourcing.