Outsourcing has become a popular and common practice these days but has been in existence for some time now. Since the mid-1700s, the Industrial revolution gripped Europe where there was a high demand for the production of goods and outsourcing became the solution for most problems.
In my view, the concept of outsourcing is still developing. As businesses are growing and their needs expand, the level of outsourcing is becoming more complex. In the technology world, new concepts are being developed at a rapid pace and the level of creativity seems to have no limit.
For a business, developing new technology or even keeping it up to date has become a challenge. This is probably one of the reasons why outsourcing is considered valuable and necessary for businesses to continue their growth.
Now there are a number of factors besides keeping in line with just technology that contributes to a company outsourcing. Cost in my view seems to be the biggest factor. If a business is looking for a product that they like to include in their set-up, they can simply get it produced where the developer is a specialist in the required field.
Taking online brokers, for example, platform technology which they offer to their clients is key for their success. They can develop their own platform but the completion will take some time and the cost of development will likely be high. Instead, the broker approaches an online trading platform developer and leases the technology which will be cost-effective and in line with all the new developments. So now the businesses are not only saving the cost but are utilizing their resources and using their focus on core business activities rather than going out of their way to develop something which they don’t specialize in, to begin with. The immediate risk here would cost, time, and lack of expertise.
When outsourcing, the business needs to consider if the service or the product will fit their needs allowing room for growth. The ability to control the product so that the quality and security are maintained according to the culture of the business is of utmost importance.
Outsourcing can have a number of advantages. Not only do we get to obtain the services from the experts in the field who have spent a considerable amount of their time and resources which results in a very good quality product, but the time required to achieve these goals is also reduced substantially. This in turn unburdens the business and reduces the stress involved in achieving these goals.
Another way of looking at outsourcing is to consider the amount of risk it involves and how exposed the businesses are to it. Quality risks are always there no matter how good the outsourced product may be. However, every business comes with a set culture and as the quality of their product is reflected in all of their projects or products, it is very important for the product to be in line with that quality and reflect that environment otherwise the difference will be apparent and may end up alienating their customers. This may also result in the company losing its ability to regularly monitor the progress and at the same time lose the right to control certain aspects of its key features. Above all of this, it must be noted that the company’s value can also be put at a major risk along with its personnel, in-house knowledge, and infrastructure.
Outsource broker technology seems to be the best solution in case the business simply does not have the in-house expertise or the necessary budget to implement a project. However, it is very critical to examine the provider’s expertise, negotiations, and monitoring the project implementation before making a decision. As with any other business practice, Outsourcing should be applied carefully in order to achieve its advantages and avoid as many disadvantages as possible.
Finally, to avoid any dispute while a business is outsourcing, an exit strategy should be taken into account and should be a part of the agreement which both parties sign.