Outsourcing a business activity can be advantageous for many reasons. It has become increasingly popular with the rise of global trade in the 1990s, as trade barriers were lowered and it was easier to find low-cost labor abroad. However, there are drawbacks to outsourcing as well. One major disadvantage is the loss of control over the process, and this can lead to sub-standard output. Another disadvantage is the lack of control over intellectual property rights and security.
Businesses are required to outsource a variety of business processes. Some tasks cannot be performed in-house, such as finance, software development, and marketing. Many of these tasks can be outsourced, including manufacturing. Some companies even outsource their entire production process. For example, Apple outsources the production of its iPhones to Foxconn, which is a global manufacturing firm. By outsourcing the manufacturing process, Apple can focus on designing and marketing products, while letting its suppliers focus on manufacturing processes.
Another disadvantage of outsourcing is that you can’t always control your suppliers or your employees. Outsourced partners may have other commitments or go out of business. Regardless, it is crucial to select a vendor that agrees to your specifications. The vendor should also be able to deliver high-quality work within agreed-upon fees. In addition, outsourcing can affect the company’s culture and employee morale. Some employees may feel replaced or frustrated, or they may find themselves in a difficult position in the transition.