Disadvantages Of Internal Outsourcing: Pros And Cons

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In today’s competitive markets companies have increasingly looked to outsourcing to increase their competitive edge, market share and profits. Models back in the 90’s were centred on the concept of one huge firm that does all the processes up until the end product. The result was that a firm had all the support services in house and this model was up until now a viable option. As the markets became more complex and competitive the need for cost cutting measures led to aggressive outsourcing in most sectors of the economy. Most companies saw that spending all resources on core processes was a competitive advantage. Outsourcing was not formally recognised as a business strategy until 1989 (Mullin 1996).
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There are many advantages to use outsourcing as a business strategy. As a rule of thumb a firm must outsource those processes that are not core processes. Internal outsourcing is defined as the concentration of internal processes to create a single or smaller compact unit. Outsourcing has its own pros and cons, but ultimately the benefits exceed the costs hence the popularity of outsourcing in modern economies.
When outsourcing they are fundamental things that one has to follow or adhere to in order to get the most out outsourcing. Now we take a look at some of the vital points in outsourcing. The following should form a basis for conducting an outsourcing procedure.
1. Internal champion: This is the one person in the group that understands the business process well from a macro and micro perspective. The advantage of having someone who understands such fundamentals is that when choosing a contractor (strategic partner) it eliminates the risk of choosing a non-viable option and they make the process easier because they know what the firm requires and what the partner can offer while looking at both the macro and micro
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