Is Outsourcing Really Beneficial?

Sure, we’ve all heard the benefits of outsourcing from those pesky sales people that call trying to push their extensive resources to your business, but are those services really beneficial to your bottom line?  In this article we’re going to take a look at some of the benefits and a lot of the downsides to farming out company needs overseas.

The first, and probably most touted claim, is price.  You just can’t hire an American to do the work for the same price as you can someone overseas and to the extent of looking only at the labor costs, you would be correct.  There are a number of factors here to consider.  Some countries have access to what amounts to slave labor and it’s just hard to compete with that at any level.  If you can take someone making cents on the dollar and train them to do what we pay someone $20/hr to do in the US, then you’re well on your way to saving some money.

But is it really that simple? Can you really only look at labor rates to decide if it’s going to help with the bottom line?  I say NO!

How many times have you needed help with an American service or product  and been sent to another country for assistance?  How did you feel?  Do you still want to deal with that company if they don’t care enough to actually speak with you?  Did you get the same level of professional service from the person that, in most cases, barely speaks English and can rarely deviate from their script?

If you run a technical company and you found cheaper development services overseas, do you find it as simple to get things done?  Is the quality of the product you produce that much better than what you had before?  How do you manage people you’ve never met? Time zones? Language barriers? Quality of code produced?

Sure there are companies all over the world, and especially in the United States, that farm out as many resources as they can overseas so that they don’t have to hire and pay taxes here.  It’s easy to get caught up in the “Pay Rate” savings and not consider all of the other things you will have to deal with as a result.  I’ve never met anyone that said to me, “Boy, I’m sure glad that company sent their technical support to Bangladesh, it’s improved so much!”  No, I hear everyone say they hate doing business with that company because they can’t get the assistance they rely on.

These things have results. Perhaps they are not immediately measurable and can sometimes be difficult to track, but they are there.  Customers want to feel attached to the company they do business with.  Sometimes this is a very important aspect of why they do business with you at all.  If you start sending them elsewhere for help just so you can save a few dollars, you may find yourself with less dollars to worry about.

The Cloud is another good example of farming services.  Cloud, by its very definition, is combining resources from all over the world in order to create a product or service without having to repeat all the work over and over again.  So, if I created an invoicing program and you have a customer program, we just work together instead of both of us trying to create what the other has already done.

This again sounds great on the surface, but once people started trying to do it in a serious way, they found they needed an entirely new department just for managing the communications and scheduling between the different countries to keep things working.  I think it’s easy to get drawn into the initial savings conversation and to not think about all of the other downsides involved in making the change.

As you’ve always heard, if it’s too good to be true, then it probably is.