While it can be easy to only see the advantages of outsourcing, there are also notable drawbacks that can be pretty frustrating as well.
I think the pros outweigh the cons, but the downsides are worth considering in order to properly put in place a plan to mitigate issues if or when they do arise.
Notable Disadvantages of Outsourcing to Keep in Mind
1. Impact on Employee Morale
The decision to outsource can lead to uncertainty and resentment among the existing workforce, which can greatly impact employee morale and loyalty.
This is especially if it results in layoffs or the perception that the company is offshoring jobs to save costs. I see this a lot during work through the services my SEO agency offers to companies.
Oftentimes, I am brought in as a “problem solver” or “fixer” by a business owner or manager who is frustrated with the company’s lack of SEO results to date. They know I have a great track record, so I’m typically asked to meet with a marketing team or current agency.
The meeting is usually fairly hostile and more often than not starts with the marketing team questioning my skills, results, and general thoughts on their work. I fully understand they’re feeling threatened, so I do my best to work along side them to mitigate these feelings.
Pro Tip: There’s very little worse than getting put on a project and getting challenged at every step. In fact, if I see the project going that way, I won’t even take it on.
If you’re bringing in an outsourced contractor, be very clear with the expectations up front – to both the contractor and the team. If the contractor is being challenged unjustly, treat that as a red flag and dig deeper into why.
2. Loss of Control
When a company outsources part of its operations, it sacrifices a degree of control over that aspect of its business. This can lead to challenges in maintaining quality standards and in ensuring that the outsourced tasks align closely with the company’s goals and culture.
I manage a portfolio of websites, so it makes sense for me to outsource the design and development of my websites. I need to remain in the strategy role and delegate to members of my team.
On one particular project, I was outsourcing development of a job board for Gigworker.com (what is now the Gigworker Community) to an outsourced consultant and developer.
However, after 3 months of virtually no progress and increased costs, I realized I had a problem. I had relinquished a significant amount of control over the development process.
The consultant didn’t really understand development, yet told me he did. The development team was decent, but it was run by the consultant who didn’t understand what they were doing.
This led to a complete redesign that I ran myself which ended up costing us a lot of valuable time, money, and missed opportunity cost.
This experience taught me the importance of maintaining control and ensuring that outsourced partners fully understand the project, the scope,
3. Communication Issues
Differences in time zones, language barriers, and cultural differences can lead to miscommunications. This can affect project timelines, quality of work, and overall effectiveness of the collaboration.
I learned about a misalignment in time zones the hard way.
When I outsourced content creation to a team in a different time zone, I faced numerous challenges. There were days when I needed urgent edits or updates, but the time difference meant waiting almost a full day for responses.
Secondly, the nuances between the cultures and language of the writers and target audiences sometimes led to content that didn’t resonate well, requiring additional revisions.
I realized that not having clear communication and a firm understanding of culture and language can cause our SEO and content campaigns to be far less effective than they should have been.
4. Quality Issues
While cost savings are a primary driver for outsourcing, it can sometimes mean compromising on quality if the service provider cuts corners or doesn’t fully understand the expectations.
I fell victim to this after not doing enough quality control for the content that an outsourced agency I previously worked with was pushing to the site.
Initially, the articles seemed fine, but over time, there was a significant drop in quality without me realizing it. It turned out that the content was not only generic, but just downright terrible.
As a result, the website was negatively impacted by Google’s Helpful Content System due to low-quality content being published.
This experience was a hard lesson in the importance of not compromising on quality for cost savings and the need for stringent quality control measures.
It’s clear that some agencies and freelancers will compromise quality if they’re not continually checked for quality.
5. Dependency on Suppliers
Relying on external suppliers for important parts of your business operation can create vulnerabilities which can impact your ability to run your business.
Relying heavily on only one outsourced partner for our website design exposed my portfolio to significant scaling bottlenecks when they suddenly sold their company and were no longer available to design my sites.
Overnight, we were left without a design service, which meant I had to scramble to find a replacement or quickly build our own capabilities in-house.
This not only limited my team’s ability to finish a project we were working on at the time, but also stressed myself, the team, and our resources.
We ended up rebuilding in-house and I’ve promised the team that I won’t let that happen again.
6. Hidden Costs
The initial cost savings projected from outsourcing can sometimes be offset by hidden costs such as legal fees, transition costs, and the ongoing costs of managing the outsourcing relationship.
Before I built my portfolio into my full-time business, I worked in the corporate world. At the time, I was in the IT department that was in charge of maintaining the technology and devices our company used.
One day, our CEO decided to outsource most of the IT functions in our company. I still had a job, but many of those around me lost their jobs.
The decision to outsource our IT support seemed financially viable initially, promising significant cost savings. However, the hidden costs soon became apparent.
First, the training costs were significant. The new team took far longer to learn the new processes, technology, and systems than was expected.
In addition, there was a lot of “brain drain” that the old team members took with them since they were let go without having time to properly train the new team.
The new team was far less efficient than the old team, meaning they took far longer to do each task. In the long run, they ended up being more costly than the old.
Luckily I left before the full impact became apparent.
7. Short-term Focus
Companies might focus too much on the immediate cost savings from outsourcing, neglecting the long-term impacts on innovation and internal capability development.
In one of my previous ventures, we heavily outsourced product development to capitalize on immediate cost savings.
This strategy, while beneficial in the short term, stunted our internal team’s growth and innovation capabilities. Over time, we found ourselves falling behind competitors who had invested in developing long-term internal capabilities.
We should have taken a more balanced approach and used outsourcing to our advantage, as a way to draw efficiency, instead of focusing on it as the main solution.
Final Thoughts
In summary, while outsourcing offers significant advantages, companies must carefully consider these potential drawbacks and address them through meticulous selection of partners, clear communication, and robust contracts and management processes to mitigate risks.
Responses