Outsourcing: Bad for Business?

I was sent a video (created by OnlineMBA.com) which raises an interesting thing to consider when you’re thinking about outsourcing:  Why outsourcing may in fact NOT be valuable to business. Check it out:

 

Now, I won’t go so far as to agree that outsourcing is “bad for business”. After all I’m a virtual assistant and RELY on my clients to oursource their work to me! And the video is primarily talking about manufacturing.

But the final point which mentions the irony of outsourcing: “The loss of intellectual property that ends up strengthening competition” is one that all businesses who outsource should think about. If you’re sending your IP overseas, how are you ensuring it’s being protected? This is just one of the points I raise in my presentations on this topic, and a strong argument for keeping your service providers at home.

I do believe that the terms ‘outsourcing’ and ‘offshoring’ have unfortunately become synonymous/interchangeable. My business relies on clients who outsource work to me. Doing so is beneficial to them for a variety of reasons but ‘cost’ isn’t necessarily a primary one – unless you factor in staff on-cost savings or savings in their productivity or the cost to them of doing it themselves.

My clients outsource to me because they see the value in the relationship I have with them and what I bring to their business.

Offshoring‘ on the other hand is primarily done by businesses wanting to save on bottom line.

I like how the video highlights that Chinese and Indian workers are beginning to see their ‘value’ and as such are beginning to increase their prices. The same applies to workers in the Philippines who have been exploited by western companies for far too long. This is something I warned about in a presentation I gave a few years ago on offshoring – I indicated in that presentation that clients looking to go in this direction should be honest with themselves about why they are doing it (bottom line savings) and not rely so heavily on the philanthropic aspects – I say if they were truly philanthropic they would be paying these providers what they are worth, or based on what value they bring to the business – not an amount the client believes is commensurate with the cost of living in that country.

Let me know what you think of the video by sharing your comments below!

© Lyn Prowse-Bishop – eSOS

 

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