Top 5 Outsourcing Drawbacks & Impact on Your Business Growth
Remote Recruitment & Outsourcing

5 Disadvantages of Outsourcing and How They Hold Your Business Back

Sharon Koifman
Founder and Remote CEO at DistantJob - - - 3 min. to read

Today’s businesses are truly global. From tools and information that flow across borders to items created in other countries, our world’s economies are interconnected. In today’s markets, competencies matter more than borders, and your search for the right employees may take you far beyond your country. If you’re thinking of bringing remote workers into your workforce, there are many ways to do this, and some come with limitations. Let’s explore the main disadvantages of outsourcing. 

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What is Outsourcing?

Outsourcing is defined as ‘’An agreement in which one company hires another company to be responsible for a planned or existing activity that could be done internally, and sometimes involves transferring employees from one firm to another’’.

In other words, companies, instead of hiring new employees, hire external employees from an outsourcing company to do tasks and projects. However, although it sounds like a simple solution, there are some potential disadvantages of outsourcing that you should keep in mind.

In a Forbes article, marketing specialist Erik Huberman talks about the importance of focusing on what you do well: “When launching a business, it’s critical to do what you are good at; sticking with your core competency is an absolute must.” For areas outside your core competencies, you may choose to bring in extra help.

When you’re looking for new employees, it’s crucial to find individuals who not only engage with but also understand the core values of your business. Equally important is identifying the solution that best meets your needs. I’ve noticed some leaders inaccurately use the term ‘outsourcing’ to describe their strategies. I explain this common mistake further in this video:

5 Main Disadvantages of Outsourcing Recruitment 

Before deciding to work with an outsourcing company, you must learn the drawbacks that your business might experience with this type of arrangement.

These are the five main disadvantages of outsourcing employees for your business: 

1. There’s Less of a Fit With Your Values

As you grow your company, you’re not only looking for skilled people, you’re looking for employees who are a cultural fit for your organization. You want your organization to grow based on shared values and ways of doing business.

When you’re outsourcing instead of bringing in new employees, you have less of an opportunity to ensure that your new employees fit with your company’s philosophy. These employees may have the skills that you need, but since they may not be with your company for the long term, they may not hold the same commitment to your company’s vision.

2. Outsourcing Brings Less Consistency

If you’re bringing in freelancers or temporary employees, one of the advantages is that you don’t tend to feel as concerned if you need to let them go. You can work with people when you need them instead of paying an employee every day. However, the downside to this flexibility is less consistency, particularly if you’re working with many different people over time.

For example, if you find an administrative assistant during a busy time of the year and bring on a new assistant next year, you constantly have to train new employees and teach them about your systems and your customers. While the job gets done, the turnover of a temporary employee is still a loss and provides less consistency in customer service.

3. Fewer Growth Opportunities

When you work with employees or remote workers over time, they have an opportunity to grow into their positions. They’ve asked the questions, they’ve made the mistakes, and they understand your customer base. Entrepreneur magazine says that “some tasks make sense to outsource initially and bring in-house later.” In-house or long term interactions allow you and your employees to grow together in your positions, making plans for how to improve in the future.

4. You Lose Control Over your Team

Another of disadvantage of outsourcing recruitment is that you lose control of your team. Not control in a micromanager way, but control over how things are evolving in your team and project. As the business manager, you may not understand the depth of each of your employees’ specialties. Still, you do need to be able to ask questions and understand the overall picture of what that employee brings to your company.

If you’re outsourcing your technical help, you aren’t necessarily as deeply connected to your tech support team. When you want your finger on the pulse of all aspects of your business, you need to be able to have long conversations, ask questions, and get to know each part of your business.

5. There’s a Higher Risk 

While your business is welcoming, there’s probably some information that you’d like to keep to yourself. Whether this is financial information or product-specific technology, every business has its internal workings that don’t need to be made public. When you’re outsourcing, you open your business to others, and you need to determine how comfortable you are with people who aren’t employees accessing your company’s data.

Also, keep in mind that you also have a higher risk when you outsource when it comes to results and the outcome. You can’t fully control the processes and the way your external “employees” work, and therefore, you have no control over what the result would be like. In some industries, this happens more than in others.

One of the main disadvantages of outsourcing IT talent is that you can’t control the entire development process as you would if it were your internal team. And therefore if developers choose to work with other methodologies or make other processes, it will be harder to establish control because they are not your employees.

The Advantages of Remote Staffing

If you’re thinking about outsourcing, you know that you need the talents of people who you may not be able to hire locally. However, you want to avoid the pitfalls of outsourcing while retaining access to a global talent pool. Remote recruiting of employees from other countries can help you bring together a talented workforce without the drawbacks of outsourcing.

Let’s go over the main advantages of remote recruiting:

Advantages of remote staffing

1. Access to Top Talent

When you hire remote employees, you automatically expand your talent pool. The main reason is because you don’t have to limit yourself to one geographical area; you can look worldwide for talented employees, helping your business increase its opportunities of accessing top talent.

2. Reduces Cost

Hiring remote employees helps you reduces your company’s costs. Because you can search for talent in cities, where the cost of living is lower, the salaries are lower. Also, keep in mind that when hiring remote employees you reduce office expenses. According to studies, businesses could save up to $10,000 per employee per year in real estate costs.

3. Reduces Employee Turnover

When employees work remotely their work-life balance increases. They have more control over their schedules, and overall, feel more satisfied. This leads to a reduction in employee turnover. According to a Global Workplace Analytics survey, 95% of employers revealed that remote work has a high impact on increasing employee retention.

4. Increases Productivity

One of the significant advantages of remote recruiting is that it maximizes productivity. Employees don’t have office distractions, and they also choose to work in an environment they feel is best for them, either in a coworking space or in a room in their house. According to a Tiny Pulse survey, 91% of remote employees state that they work more when they are not in an office.

5. Environmental Impact

The new green business consists in hiring remote employees. According to the Global Workplace Analytics, if an employee in a remote friendly job choose to work virtually half the time, they would save 45 million tons of greenhouse gas and an average of 119 million miles of highway driving.

When you’re building your remote team, consider DistantJob remote IT staffing services. We focus on bringing the best people to you from around the world, and we can help your business overcome the disadvantages of outsourcing while maintaining the advantages of a global workforce. Contact us today for more information about how we can help your business grow.

Sharon Koifman

Sharon Koifman, the founder and remote president at DistantJob, specializes in recruiting top remote developers and spearheading remote workforce strategies. Sharon's approach combines cutting-edge remote recruitment practices with a deep commitment to building effective, globally distributed teams.

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Let’s talk about scaling up your team at half the cost!

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