Why Not to Off-Shore Outsource

Although there are several reasons in favor of outsourcing, a company must also consider the disadvantages. There are risks that need to be analyzed whenever a company embarks on a new business venture like outsourcing. While it is a hot trend nowadays and seems an attractive option for many, by using low cost off-shore resources, a firm must consider and measure risks of using an off-shore versus on-shore partner. Data from off-shoring is finally being compiled and shared. The studies show that off-shore outsourcing while at first glance offers flexibility and low cost really provides headaches and higher costs. This can be seen from the various disadvantages that have been found:

· Off-shoring and utilizing different time zones while appearing to provide flexible and more working hours really creates a wider loss of managerial control, because it is more difficult to manage, contact and turnover work products.

· Off-shoring firms often have hidden costs are difficult to calculate or prepare for. These include legal costs related to putting together a contract between two companies, the time spent to coordinating the contract and then after contract terms to find that there are various other costs to consider.

· Off-shoring firms can be a threat to security and confidentiality. If your company is outsourcing processes like payroll, accounts receivable, accounts payable or other confidential information, a company must be very careful in “disclosing to it’s clients that it is using an off-shore firm.” If not the liability factor opens and could put your firm out of business.

· Off-shoring often leads to possible loss of flexibility in reacting to changing business conditions, lack of internal and external customer focus and is more concerned with cost than quality.

· Off-shoring often includes unfavorable contract lengths, loss of competitive edge, problems in contract renewal, and contractual misunderstandings.

Therefore, the concept of Off-shoring instead of just outsourcing has been criticized. The negative attitudes toward offshore outsourcing have been discussed amongst not only accounting and bookkeeping industry experts but also entrepreneurs, and small to medium sized businesses and the bottom line comes down to one simple statement: “Don’t cut-off your nose to spite your face.”