Disadvantage Of Outsourcing.

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Advantages Of Outsourcing

1. LOSS OF CONTROL
   Core activities should not be outsourced unless impracticable to do in-house. Any incompetency identified by market can be threatening to the reputation of the business.
2. LACK OF INDEPENDENCE.
   Business may became dependent on outsourcing organization because of loss of competency and resources in the business. In case of breach, it will be difficult to setup activities immediately. Delays can damage reputation and cash flows.
3. EMPLOYEE MORALE
   Employee may lost their skills overtime and resentment can happen if outsourcing leads to forced redundancy. It can seriously impact productivity because their will be little motivation regarding promotion and growth. In extreme cases it may end up with deadlocks.
4. COST MAY EXCEED BENEFITS.
   There may be cost associated with employee redundancy payments, early termination penalties and disposal cost of property,plant and equipments. Benefits determined are future expectations which may not come true.
5. REACTION OF STAKE HOLDERS
   These include shareholders who may sell their shares can affect the share price, financers who may demand repayment of the capital, customer who may take their business elsewhere and supplier who may change their business terms depending upon their perception of business future.
6. LEGISLATION.
   It may protect some stakeholder rights by enforcing legislation e.g. imposing high import duty to protect home industries or requiring some activities or standards which pre-requisite of operating particular sector by imposing licensing requirements.