Every organisation is not competent in every activity, and to get those things done properly and efficiently, it needs to outsource some of its activities from outside. This contracting out of some activities that were earlier performed by the company itself to a third party is known as Outsourcing.
For example, Urban Company has started outsourcing different services like cleaning, repairing, grooming, painting, etc., to households and other companies on a contractual basis.
Companies usually outsource non-core activities to different specialised service providers that are less important to them. It helps the companies take benefit of the outsourcing company’s expertise, experience, and cost-effectiveness in the outsourced non-core activity, and companies can focus on the core activities themselves. The four major segments of outsourcing are Contract Research, Informatics, Contract Sales and Contract Manufacturing.
Concerns Over Outsourcing
For getting things done from the outsourcing companies, the organisations have to share essential information and knowledge with them, which reduces the confidentiality of the business. The outsourcing company might take the wrong advantage of the confidential information of the organisation. Besides, there is also a great risk of outsourcing a company starting up a business against it.
The organisations which get their activities done from the outsourcing agencies want to gain maximum benefit from the low-cost manpower of the host country. However, the outsourced work does not require thinking skills from the company, instead, it requires doing skills, and these skills do not make the outsourcing company competent.
3. Ethical Concerns
Sometimes companies outsource different activities from developing countries to get the cost advantage benefit, which might result in unethical behaviour, as in these countries weak laws prevail, and mostly children and women are employed. Besides child labour, a company might enter into unethical behaviour by outsourcing activities from the countries practising wage discrimination based on the sex of the employees/workers.
4. Resentment in the Home Countries
Outsourcing activities from other countries indirectly switch employment opportunities from the home country to other countries. Because of outsourcing from other countries, people of the home country might feel resentment, as they have to suffer from unemployment.