Who doesn’t like a sale? When a vendor is selling a product or service at a cheaper price as compared to the usual market price, customers are naturally drawn to it. With the same mindset, outsourcing in low cost destinations had also gained popularity a few decades back. Since then, it has received a lot of mixed opinions from business owners from all fields. But outsourcing to affordable geographies like India and other overseas locations has become the one-stop solution for many businesses, including BPO (Business Process Outsourcing), KPO (Knowledge Process Outsourcing), and LPO (Legal Process Outsourcing).
Why business owners prefer to outsource to India?
Outsourcing is a simple process where the work that is usually done by your in-house employees in a conventional setting, is done by a third-party company on a contractual basis. The demand for outsourcing is increasing day-by-day. Be it digital marketing or web development, the decision to outsource to India has proven to be a successful call for many. The trend to outsource might have started with the perspective to save cost, but gradually, other numerous benefits of this crucial business venture started to come into limelight.
But the most important thing to keep in mind while outsourcing to India is choosing the right vendor. Considering the cutting-throat competition in the outsourcing service market, this might be a time-consuming process. But you most certainly wouldn’t want to end up with the wrong outsourcing partner as that will do you more harm than good. Then why are more and more businesses inclining towards outsourcing?
Well, the reason behind this steep increase in demand to outsource to India is the rise of automation and redundancy there. Because of this, the labour market has become more affordable. In fact, business owners claim that they have saved up to 70% on their overall operational cost. Plus, the Indian workforce is as talented as your local employees, so there is hardly any difference in the quality of work that is delivered.
If outsourcing is on your mind, we have got the top pros and cons of outsourcing to guide you in this endeavour.
Pros of Outsourcing to India
Increases Company Profits
The most prominent reason behind outsourcing in low cost destinations is (without a doubt) cost savings. The Indian labour costs are comparatively lower than that in the developed countries. Other than that, the cost of additional office room and equipment, hiring and training, and other employee benefits are directly saved.
Larger Talent Pool
India is home to a large number of outsourcing service providers. Hence, you get a lot of options to choose from – not only service vendors, but virtual employees from multiple domains. From human resource and administration work to client servicing and graphic designing, expert services come packed with high quality assurance.
Most work projects are short term and do not continue forever. Hiring in-house employees for accomplishing these projects can be a burdensome experience for business owners operating in developed countries with strict hire and fire norms. But if you outsource to India, easy scalability as per your work requirements is a lucrative benefit.
Freedom to Focus on Core Tasks
There are certain core tasks of every organization that should ideally be taken care of by the key management members. But due to the required cost cutting, owners of many businesses (especially startups) try to fit in many roles at a time. Outsourcing helps you assign these non-productive tasks to a reliable third-party at around 70% lesser costs, so that your core business tasks and tight budgets do not suffer.
Flow of Job Opportunities
Discussing about the pros and cons of outsourcing will be incomplete without a mention of job flow out of rich nations, which is indeed good news for professionals in developing countries like India. Distribution of tasks from developed to developing countries enhances overall efficiency of the Indian economy and increases productivity for the outsourcers at the hands of highly skilled workforce.
Stronger International Work Relationships
According to the warfare and political experts, two countries that trade with each other are less likely to wage war against each other as they have some mutual financial goals. Hence, outsourcing can be a resilient step towards strengthening international ties.
Cons of Outsourcing to India
Local Job Loss
A win for someone might be a loss for the other. If you outsource to India, the less developed nations benefit without a doubt, but one of the biggest negative effects it creates is loss of local jobs.
Selecting a Wrong Vendor
Your decision to outsource to India might backfire in case you end up with the wrong outsourcing service vendor. This can lead to missing deadlines, inferior performance or communication problems.
Feeling of Alienation in In-House Employees
The announcement of going offshore might put your in-house employees in a state of confusion and alienation. If you don’t fix this in time, it might hamper your in-house work performance adversely.
Degrading Labour and Environmental Standards
According to some critics, outsourcing in low cost destinations can be responsible for general slippage in the environmental and labour standards involved in the third-party production of goods and services.
Lack of Transparency
These days, all the customers want to know about the origin and manufacturing process of the product they’re investing in, but outsourcing makes it difficult to track a company’s supply chain.
As already discussed, outsourcing in low cost destinations has always garnered a lot of mixed opinions. But considering its high success rate across the world, the number of people adopting it as a lucrative business call is increasing day by day.
Business owners, especially startup owners from developed countries find outsourcing as the best business expansion model. But yes, if you do not pay attention in partnering with the right service vendor, outsourcing might not always serve like a cost-effective home run. We believe that the above-mentioned pros and cons of outsourcing settle your basic arguments around this leap of faith, and you can make an informed decision.