Many companies, either big or small, started to turn their working system to outsourcing. However, there is a fact remains. Why are people against outsourcing? It is a proven method used for cost saving that can save some small or start-up businesses to improve their success chance. Even big companies can derive the same advantage from it.
Outsourcing is often met with criticism because it generally has some implications. There are some concerns about job losses, lower service quality, and a few more reasonable reasons that we will discuss here.
Economic impact of outsourcing is the first and foremost reason for people’s concern. It has quite a significant impact on the local job market, especially in labour cost and requirements.
Outsourcing, particularly to countries with lower labor costs, can lead to job losses in the local job market, especially in industries like manufacturing, customer service, or IT. People may feel displaced by this system.
Another potential impact would be the suppressed wages for the local workers. Outsourcing can be a cost-saving alternative for the business due to the “deemed cheaper” wages and cost compared to the local.
Reasons against outsourcing also come from quality and service issues. Especially, when the outsourcing company is located outside the local area. Some things become a concern, such as:
Some people believe that outsourcing may affect the quality of the products or the services given to the consumer. The reasons are that overseas workers may lack the same training or experience as the locals. Additionally, they may not understand the standard of the local market.
Especially in service industries, outsourcing may cause some problems or frustrations due to language barriers, cultural differences, and also time-zone mismatches. This happens when the outsourcing services are provided by a company located outside the local area or even in different countries.
Another reason why are people against outsourcing is the security and privacy risks matter. Every business has its data, information, secret recipe, or other similar matter to protect. It raises the impact it has on the business concerned.
Sensitive data, especially in IT or healthcare industries, is an important issue to address. Due to the impact it has to the business and the consumer involved. It should have the proper data handling and protection to avoid any problems.
Some companies might be concerned about losing their intellectual property when outsourcing their production or services, as some regulations might require otherwise.
Reasons against outsourcing may also come from the consumer’s point of view, especially, when it is connected with national pride. It could influence their perception regarding product or service quality, pricing, and customer service experiences.
As discussed above, some consumers could encounter reduced service quality due to communication barriers, cultural differences, and time-zones.
Outsourcing could “hurt” national pride and might be seen as unsupportive to local businesses and workers. This is especially true when the price or cost is cheaper than the local products or services. This could hinder the locals from developing their businesses due to the price discrepancy involved that potentially leads to affecting consumer’s purchasing decisions.
Some would say that relying on foreign countries for critical products or services could pose a threat or be seen as a risk to national security. It might be seen that the local could not provide the same or even better products or services needed.
Reasons against outsourcing can also be viewed from social and ethical considerations. The impact is seen wider by the general people, such as the local workers and job markets.
Critics might argue that cutting costs could be done by low wages, poor working conditions, and lack of strong labour laws and protections. Usually, this concern emerges from the situations of nations that are densely populated.
Labour exploitation, for instance, could also affect consumer purchasing decisions, as they increasingly value socially responsible businesses.
As the Go Green movement spread across the world, some products with less stringent regulations could lead to increased pollution and environmental degradation. The impact of cutting cost could affect the material used in the products or services.
Prioritizing short-term cost savings could affect the long-term investment in local talent and infrastructure. The convenience of outsourcing could cause businesses to neglect any plans for long-term investment, such as looking for any good products, services, or talents locally.
Overreliance on external services may cause vulnerabilities and limit the company’s ability to adapt to changing market demands locally. Developing locally is crucial for future competitiveness to build sustainable growth.
As discussed above, even though outsourcing has many proven advantages, there are still some concerns against it. Reasons against outsourcing are based on the combination of economic, ethical, social, and many other issues.
Nevertheless, businesses have legitimate reasons for outsourcing. It allows companies to focus on core operations while delegating non-core tasks to external providers. Outsourcing offers many advantages such as cost savings, access to expertise, and increased system efficiency. All the much needed reasons for sustainable growth.
It should be emphasized that any world-class outsourcing company will have a much different and more sophisticated system applied. Their services and products are dependable and up to date with the generally applied regulations.
Such a company is Global Virtuoso that could provide world-class services to any companies they served. This US-based company has various services to assist your business without neglecting your local regulations and could make customized services accordingly. Go to Global Virtuoso service page to learn more. https://globalvirtuosoaccounting.com/blog/advantages-of-outsourcing-bookkeeping-services/
