Outsourcing: Benefits vs. Risks

Outsourcing, also called subcontracting, is the process of engaging a third party to carry out a business activity. In reading this technical note, you may find the benefits and risks of this practice that has become increasingly recurring in organizations. For the research, a search was made in initial and secondary sources, where the information provided by businessmen who serve as examples to clearly illustrate each item was essential. Some of the benefits of outsourcing are as follows: hiring the suppliers that offer lower costs, reducing or eliminating fixed costs, and focusing on the supplier's key activities, knowledge, experience and technology. In the case of risks, the following are broadly described: turning a supplier into a competitor, loss of knowledge and skill, dependence on the supplier, increased costs, impact on the work environment, and failure to meet quality expectations and delivery times. Outsourcing is a strategy that must be thoroughly analyzed because, while it entails many benefits, there are also risks that must be identified, measured, assessed and managed. The decision should not be justified by economic aspects only; the analysis should include the importance of the process for the company, the supplier's experience, the business agreements and any other aspect that allows to make a decision in accordance with the organization's strategy.