Disadvantages of Outsourcing!

In my previous blog we have talked about the advantages of Outsourcing, Now I would like to share some disadvantages of Outsourcing.

Loss of Managerial Control: Once you sign a contract to have another company performing functions of an entire department or a single task, you are giving them authorization to make decisions. Hence; the company might feel a loss of managerial control.

Hidden Costs: You will sign a contract with the outsourcing company that will cover the details of the project costs. You will be entitles to pay anything that is not covered by the contract. Additionally, in some cases you will also be obliged to pay for legal fees. Just remember that it is the outsourcing companies that write the contracts for you.

Threat to Security and Confidentiality: With outsourcing there is always a risk of losing company’s secure information .If the contract involves sharing such confidential details that could be a major disadvantage and companies need to include penalty clauses in such cases.

Quality problems: The outsourcing company will be motivated by profit. Since the outsourcing fixes the problem by lower the expenses, they make the profit. But sometimes, you will lose the ability to respond the changes in the business environment.

Tied to Financial Well-being of Another Company: Since you have handed over operations of you are company, you are always keen on learning the well-being of outsourcing company.

Bad publicity: If you live in a community that has an outsourcing company and your friends and family are employees. If they lose their jobs, that is a bad reputation for the company.

Sources:
http://operationstech.about.com/od/outsourcing/tp/OutSrcDisadv.htm