Financial benefits and risks of effective outsourcing implementation

Outsourcing

If effectively implemented, outsourcing can be a tremendous financial boon for a company. For example, in a country such as India with an English-speaking workforce and a highly technically literate population, even sophisticated jobs at an IT company can be employed by far cheaper employees than would be available in the United States. (Bagala, 2005) Thus, the careful choice of a country that is a good match for one's product, goods, and services is critical when considering the prospect of outsourcing. Outsourcing can cut costs, and it can also infuse a company with new talent and international knowledge from a talent pool that extends far beyond the United States. However, the services rendered must not experience a drop in quality from the consumer's point-of-view -- a poorly trained staff member that does not inform a consumer correctly about remedying a costly computer glitch will create bad press for the company. Additionally, the company must be sure that local laws regarding worker payment, the currency exchange, and the technical costs of outsourcing work will not be so high as to make the savings in salaries negligible

An additional problem with outsourcing, besides local worker competence and bureaucratic red tape in the foreign country, is that outsourcing often creates a negative public image for the company. It is assumed United States jobs are being sacrificed.