Companies today are using technologies such as cloud computing and data analytics to improve productivity and cut operating costs. Another technology that many businesses have embraced is online outsourcing. Although outsourcing certain functions and business processes to different teams can be beneficial, it is vital to note that this approach could harm your company. That said, here are some positives and negatives to online outsourcing:
The beauty of outsourcing certain tasks online is businesses can save significant amounts of money. They do not have to hire and retain employees who will definitely require medical cover and expect pay hikes in the future. In addition, a business can outsource business functions whenever necessary. For example, a company could outsource payroll functions just before the month ends, meaning you would only have to pay outsourcing fees for a few days every month.
Access Specialized Skills
Outsourcing allows companies to access specialized skills that they might be unable to hire. A case in point is the large number of data analysts and scientists available on Kaggle.com. Businesses post their data challenges on the website and invite data scientists to solve them. While some data challenges come with financial prizes, others do not. In fact, Fortune 500 companies such as Facebook, IBM, and General Electric have used this outsourcing platform to solve business problems they face every day. You, too, can enjoy the same benefits by outsourcing tasks and functions to experts online.
Address Seasonal Needs
Many businesses especially ecommerce sites as well as traditional brick¬ and mortar retailers require additional staff to handle customer orders during Christmas and Easter holidays. Since it does not make financial sense to hire such staff permanently, it is wise for businesses to outsource tasks like order fulfillment. After the end of these busy seasons, they can dismiss outsourced staff and remain with their permanent employees. This approach is beneficial because businesses do not have to worry about the financial and legal ramifications of firing staff.
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The problem with online outsourcing is it could cause customer dissatisfaction. According to a report published in the Wall Street Journal, companies that outsource customer service functions locally or overseas tend to alienate and even lose loyal customers. In addition, they lose about five percent of their market capitalization. This loss is due to customers fleeing and taking their business elsewhere.
Loss of Team Synergies
Outsourcing some business functions could lead to loss of synergies that most people take for granted at the workplace. For example, outsourcing sales lead generation and nurturing functions to a firm that operates from another continent or time zone could have a negative impact on your business’s sales cycle. Your sales people would have to wait for sales lead information from an outsourcing firm that maybe halfway around the world. This makes it hard to foster great teamwork among your regular staff and outsourced employees.
Data Privacy and Integrity Issues
Some businesses deal with sensitive information and data like credit card details or social security numbers. Outsourcing tasks that allow foreign firms to access the same information could be in contravention of data privacy laws, regulations, and acts such as HIPAA, ECPA, and Online Privacy Protection Act (OPPA). This means that entrepreneurs and business owners cannot wake up one day and just decide to outsource tasks that contravene these laws and regulations.
In summary, technology is a great tool that a business can use to improve operational efficiency and increase sales. One of the technologies that an entrepreneur can use at work is online outsourcing. Benefits include access to a pool of specialized talent, address seasonal staffing needs, and save money. On the other hand, drawbacks include loss of team building synergies, customer dissatisfaction, as well as data privacy and integrity problems.