Outsourcing Disadvantages

Outsourcing in general can be defined as passing of service provision or production to another internal or external party. The chief reason of outsourcing is to reduce capital expenditure over a business process.

Loose Managerial Control This happens because it is harder to manage the outsourcing service provider as compare to managing one's own employees.

Potential Hidden Costs: includes legal costs of putting together a contract between companies and time spent on coordinating the contracts, This hidden and missed out costs of outsourcing is hard to predict causing overall costs to be underestimated.

Security and Confidentiality: If your company is outsourcing business process such as payroll, confidential information such as salary will be known to the outsourcing service provider. Therefore one must be very careful in choosing which business process to outsource and which one not.

Attitude of outsourcing employees: since they are not part of the firm they are serving they are not as loyal as real company employees.

Loss Of Flexibility: in reacting to changing business conditions, lack of internal and external customer focus and sharing cost savings.