Outsourcing and Recession

This is one of the most discussed topics across the industries; especially in Information Technology, Accounting services, Legal, Documentation, Logistics etc. There has been a debate going on, whether to outsource or insource projects. There are many advantages and disadvantages in doing both insourcing and outsourcing.

Insourcing is beneficial when a company wants to offer its works to other internal party yet not a part of the organization by keeping close contact and to maintain excellent working atmosphere. The negative aspect of insourcing is the availability of necessary resources at competitive prices. Here time and availability becomes major factors. Whereas, Outsourcing happens when a company (Outsourcer) hires the services and infrastructure of another company (Outsourcee) that would otherwise be done by in-house staffs

Outsourcing offers many advantages to businesses. Cost savings and flexibility are the main two quoted advantages of outsourcing. Most of the outsourcees work from countries having infrastructures and human resources at low cost compared to other countries. So this would definitely bring huge savings on project cost or cost related to the services. Flexibility as said before is another advantage of outsourcing. The outsourcer company can use their resources on a better way and more time could be allocated for strategizing, planning and marketing. It also helps to reduce overheads of outsourcer Company. Here the outsourcer Company will only be paying outsourcee Company for what they have actually produced. As outsourcing
can be advantageous most of the times, there are also few disadvantages of outsourcing which includes lack of direct managerial control, unfavorable contract lengths etc. But this could be managed if the outsourcee company has more focused project management teams who could deliver expected results on time. Most of the outsourcing companies are offering quality workforce to meet the precise demands of their clients and to develop a rapport in the industry.

Outsourcing during recession – Is it beneficial?

Recession is often said to be a period of an economy where there has been a negative growth in the Gross Domestic Product for more than two quarters. During this stage people and companies usually takes steps to reduce the outflow of money. Here the success factor depends on how to create more margins from low investments and spending.

There have been many researches and surveys conducted related to the spending of companies on products and services during recession. Most of the surveys and researches concluded that enhancing efficiency and improve productivity by spending less is the key. These studies prove that opting to outsource and improve the product and service margins would create more liquidity and feasibility in the company.

Most of the companies in countries like India have taken steps to provide quality services at low cost and bring more flexibility to Outsourcer Companies. Most of the Outsourcee companies have project management softwares and teams to analyze the cost of a project.

Thus, it is always sensible for businesses to outsource its services and beat the recession slumps.