Offshore outsourcing is a controversial topic, with some seeing it as cost-effective and essential, while others note potential problems with customer service. Benefits include lower costs for manufacturing, IT, and other functions, but drawbacks include language and cultural barriers and negative public perception. Companies must weigh the pros and cons before deciding which functions to outsource.
The concept of offshore outsourcing is one that causes a lot of controversy between different people. Some find this approach to doing business extremely cost-effective and even essential to keeping a business afloat. Others oppose offshore outsourcing, noting the workflow to international locations and other factors sometimes lead to problems with the delivery of quality customer service. Indeed, there are numerous pros and cons that a company should evaluate before deciding to outsource one or more functions to an international office.
Proponents of offshore outsourcing often point out that a great deal of money can be saved using this method. This is especially true with manufacturing situations that allow goods to be produced at lower cost, due to less stringent taxes and regulations that apply in some countries. At the same time, the process allows you to benefit from lower labor costs and the ability to waive extended allowance packages that would be necessary in an in-house manufacturing situation. Lower production costs mean that each finished good can be produced for less money, making it easier to sell those products at competitive prices in the marketplace. As a result, the company that uses offshore outsourcing to manufacture goods will benefit from a higher profit margin.
There are also benefits to using offshore outsourcing for other functions. For example, customer service and support can easily be provided using professionals located in an international location. Offshore IT outsourcing is also a possibility, which allows companies to avail the expertise of Information Technology at a lower cost. Other essential tasks in business operations can also be outsourced to an international location and accessed remotely, including secretarial support, saving the business a great deal of money.
While there are a number of benefits to offshore outsourcing, there are some potential drawbacks as well. This is especially true when language or cultural barriers complicate the communication process. For example, customers who seek help and support through a customer service line and are unable to understand support staff responses are likely to become frustrated and stop doing business with the company. Concerns about the impact of this type of outsourcing on a nation’s ability to effectively produce its goods domestically have also led to a backlash in specific industries creating poor public relations for companies that choose these solutions. Because public perceptions can influence sales, many companies weigh the benefits of offshore outsourcing against the potential damage to their reputation and bottom line before deciding which functions to outsource and which to continue to operate domestically.
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