Small Business Outsourcing: Weighing Pros and Cons for Success

This report provides a comprehensive analysis of the advantages and disadvantages of outsourcing for small businesses. It highlights the significant benefits, such as reduced expenditures through lower labor costs in developing countries, access to a vast pool of skilled talent, and decreased pressure on existing staff. The report also addresses the potential drawbacks, including communication issues, quality control concerns due to the lack of direct oversight, hidden costs that can arise, reduced levels of control over outsourced operations, and the time-consuming nature of the outsourcing process. The report concludes by emphasizing the need for small business owners to carefully weigh these pros and cons, considering that while outsourcing can offer substantial cost savings and efficiency gains, it also requires careful management to mitigate potential risks and ensure successful outcomes. The report includes an extensive bibliography of relevant sources.

Name of the Student
Name of the University
Author Note
Pros and Cons of Outsourcing
for a Small Business

Pros of Outsourcing for a Small
Business
Reduced Expenditures –
One of the most well known benefits associated with
outsourcing for a small business is the fact that the costs
involved in doing so are quite low. One does not have to spend
a fortune in order to outsource business tasks and operations to
a third party. If business operations are being outsourced
globally, then there is every chance or opportunity for that
business to benefit from the reduced cost of labor (Broeckmier
et al. 1).
A worker in a developing country will charge far less than what
a laborer would in the developed countries of the world,
especially in the countries of the Global North. Outsourcing also
provides a business owner with the scope of getting a number
of tasks completed on time without having to make any
investment whatsoever in any long term employment (Burns 1).

No Need to Hire Full Time Labor
Hiring employees at all is something that small-
scale business owners can avoid alltogether, when
they take the decision to outsource business
operations instead of carrying out such operations in
the confines of a city or town in a given part of the
world.
Since the cost of recruiting employees is something
that is quite substantive, business owners get to
save a considerable amount of money by avoiding
the hiring of employees and outsourcing the work of
the business instead to freelancers or temporary
workers in other parts of the globe who can get the
job done at half the cost (Donnelly et al. 422).

Access to an Enormous Pool of
Talent
One of the best reasons why the owner of a
small business should outsource business
operations instead of getting these done by
full time employees is because of the
hugely talented pool of labor that such an
employer gets to access upon doing so.
Laborers in developing countries of the
world may charge less for the work that
they do but this is not to say that they are
less skilled than workers in the developed
world (Flynn et al. 443).

Reduces the Pressure for
Staff
Outsourcing is an activity that can definitely bring down
the pressure levels for the team that is associated with
the primary operations of any small-scale business
enterprise, especially if this is a team that is focused on
performing extra tasks while focusing on their respective
duties at the same time (Hatten 1).
Expansions in business operations or heavy workload is
something that is likely to affect the staff working for any
enterprise, be it a large scale business or a small
business. When business operations are outsourced to
other people in other parts of the world, this reduces the
pressure on the staff working for a small-scale business
enterprise by a considerable degree.

Reduces Problems of
Inefficiency
Dealing with inefficient and unproductive staff is
not likely to be a problem any longer when a small
business owner outsources business operations to
people in other parts of the world. It is likely that
the staff of a business enterprise can lag behind in
work when this staff is de-motivated or when
there is work place discrimination etc (Klimovets
et al. 193).
However, when the work is being outsourced, the
individual who takes up the responsibility of doing
the work will get it done as quickly as possible in
order to be paid at the earliest for doing the work

Cons of Outsourcing for a Small
Business
Communication Issues –
There are a number of cons that are associated with
outsourcing operations for a small business enterprise
as well. Communication for instance becomes really
difficult to do for the small scale business owner who is
outsourcing all of the work (Mageta et al. 11).
 The owner of the small business will definitely be able
to get the work done for the business at prices that are
far less than the usual. However, such a business owner
may not be able to communicate the needs and the
requirements of the business to the person who is taking
up the work and who may not end up doing a thorough
job because of such a lack in communication (Sharma et
al. 590).

Quality Control Issues
Quality control is also something that the small
scale business owner is not going to be able to
exercise when outsourcing business operations
instead of getting this done by a full time staff.
Since the business owner will not be able to see the
work being done for himself, in person, he will not
be able to supervise or monitor the work, neither
will he be able to hire a supervisor or a manager
who will oversee the quality of the work that is
being done.
The business owner shall be in a position to
supervise the outsourced work only after it has been
submitted to him (Sonfield et al. 35).

Hidden Costs
There are a number of hidden costs that can
arise when outsourcing the operations of a
small business. While outsourcing may seem
easy to do at first, in reality this may not be
the case and there may be plenty of liabilities
that the business owner is faced with because
of issues like hidden costs and expenditures,
which end up being a huge drain on his
budget. For instance, a small business owner
may be in a position to get a lot of work done
for his business at a reduced price when
outsourcing the work (Verschoore et al. 152).

Reduced Levels of Control
A small business owner is not going to be
able to exercise much control when
outsourcing the work for a business rather
than getting it done by a permanent and
full time staff. Such a business owner is
going to have to leave it to the person who
is taking up the outsourced work to get the
job done perfectly (Wang & Wang 1).

Time Consuming Process
The process of outsourcing the operations
of a small business can also be quite a time
consuming affair. The business owner will
have to first decide exactly which are the
operations of the small business that are
going to be outsourced after which, a
decision will have to be taken regarding
who it is that the work is going to be
outsourced to (Williams & Alvaro Martinez.
1).

Conclusion
Thus, there are quite a few pros as well as cons that are
associated with the outsourcing of business operations on the
part of a small business owner. While the pros are definitely
many, the cons are even more in number.
When the small business owner outsources his business
operations, he gets to save a lot of money, a lot of time and
hassle, all of which is supposed to ensure profit and productivity
for him and his enterprise over the long term. However, when he
outsources his business operations, he fails to be in control of his
business anymore.
He is not able to supervise and monitor the work that is done for
him, he is not able to see for himself exactly how his operations
are being conducted and will simply have to be content with the
work that is done

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