Recently, we published an article about Microsoft’s plan to acquire LinkedIn. This is a financial purchase that may well pay off for the tech giant. However, there is no doubt that it is also a big risk. That said, it’s a risk the company is in a position to take, and we think there might be a key reason for this.
Tech companies have been saving a lot of money by outsourcing different areas of the business. Usually, these are areas that are expensive to run and maintain. Companies can use outsourcing businesses to run that specific area for them. By doing this, they cut costs and get the benefits of a great service. It sounds like a win-win scenario, and there is a lot of support for outsourcing companies. But, are they as beneficial as they seem.
Firing Employees
It might seem like to start outsourcing a section of business; companies just need to fire current employees. Then they can rehire the staff in an area where labor is cheaper. Or, they can use a different company for this job instead, cutting staff costs out of the equation completely.
Unfortunately, or perhaps, fortunately, for employees, the situation is never this simple. Employees are protected under TUPE. To understand how TUPE regulations affect employers, we need to consider outsourcing specifically.
If you do decide to switch an in-house service to another business, all employees affected have a right to a TUPE consultation. This will determine what rights they have and how these will be awarded. It will undoubtedly cost the business owner quite a lot of money. Already, the initial set up for outsourcing poses a problem.
Providing A Quality Service
Obviously, if a business uses an outsourcing solution, they want to make sure that it has the same quality of service as their company. Often, however, this is not the case, and you get what you paid for. Customer service outsourcing is a great example of this. Customer service support teams are often outsourced to international businesses.
Often, in countries where English is not the first language. In this situation, customer service operators may not be able to communicate as effectively. Customers in the country where the product or service was purchased receive poor service. This reflects poorly on the business. If a business does use a poor outsourcing service, they cannot blame that company for their failure. They need to take responsibility for it.
Backlash
Then there is the issue of the backlash of using an outsourcing service. Outsourcing has a negative stigma attached to it. People view companies who use outsourcing companies as taking jobs from the first country. Often this is no longer the case, and outsourcing companies keep business in the country, however, that negative stigma is difficult to diminish.
If a business does announce intentions to outsource, they may face a lot of negative publicity.
Although outsourcing can save businesses money, there are a lot of disadvantages that may outweigh this benefit.
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