subject: Outsourcing Hidden Expenses Exposed [print this page] Outsourcing is a business strategy applied by a lot of companies today, may it be a small firm or a large corporation. They have heard of its benefits such as increase in productivity, lower production cost, and more time for the company to focus on the core business activities. However, business owners should also be aware of the disadvantages of outsourcing. The lower cost it presents may not really be there by the time they get to compute everything. This article will reveal some of the hidden cost of off shoring and outsourcing for the benefit of those riding the bandwagon.
Expense is incurred when production does not meet the standards and deadlines due to miscommunication. Offshore outsourcing may save dollars but it can also add to the expense if communication is not established throughout the entire process. Meaning can be lost in translation resulting to missed deadline submissions and poor standard of quality.
Product outsourcing should never be a last minute option for the company. It should be included in the business paradigm and strategic vision in order for it to become a success. Everything that is carefully planned and thought of will return with better results than something that is just rushed.
The selection of a capable product development outsource company can prove to be costly as well. In the interview of viable outsourcing firms, ask the hard questions to better evaluate their response. Companies need to know if the outsourcing agent has the expertise to handle the production of goods, if they are able to comply with approved management practices and if they are able to meet the service contract.
Other hidden costs of product development outsource are transfer of technology and the time to designated someone to interface with outsources. Not to mention the re-aligning the company's internal resources to meet the needs of the outsource firm. The company might also have to address the potential employee objections and dissatisfactions.
Having production outsourced does not stop from the initial output. It actually continues on and on that is why the cost of monitoring should also be considered. Regular meetings should be scheduled and reports should be transferred and read. All of these should be accounted for when computing for the cost of product development outsourcing.
