Does outsourcing work to your advantage or disadvantage?

For a layman or a businessman who has a surface knowledge of outsourcing, it would seem a complete waste of time and financial resources, which can end up with unwanted complications. One might wonder why one would need to assign work to other individuals if you know what is be good for your business? Why delegate the work to outsourcing professionals if you can do much better right within your own organization with the help of in-house personnel… ?

However, the astute businessman would have already realized that outsourcing is a modern day boon brought to their fingertips mainly by the technological leap that has enabled fast information sharing and networking around the globe. Not too many decades ago, getting global information and profiting from it would have been an exercise of time and labour and could have been limited to a certain perimeter around your business area Today, many businessmen are aware that outsourcing provides them the freedom of delegating all non-core yet important aspects of their business to an individual or group of individuals who can give justice to the process. Thus, it would leave businessmen free from additional responsibilities and allow them to focus instead on the core of their business. On the other hand, the outsourcing firm can also focus on the specific work delegated to them, thus enabling a cost-efficient business operation. That is one of the primary advantages of outsourcing.

Another enticing advantage of outsourcing is the cost-effective measures that you can take for your business. Offshore businessmen are aware that certain services that would be most expensive in some countries could be obtained at competitive rates for the same quality in offshore destinations such as Sri Lanka, India and Phillipines due to the currency conversion rate. Whether it is within the country or offshore, outsourcing is a "win-win" solution for the outsourcing company as well as for your business.

A Director of Maritime Placements Ltd, Ms Charmaine Vanderhoeven commented that in recent times, outsourcing non-core activities has been found to be a valuable and practical option in Sri Lanka that has brought clear benefits to the employer not only in terms of cost savings. The employer may use their own business premises, tools, equipment and raw materials and purchase the services of an outsourcing service partner to provide employees to perform specific tasks or whole areas of non-core activity for the principal employer. The outsourcing partner is thus considered the employer, freeing the principal employer from the traditional employer-employee relationship and responsibilities towards statutory requirements .The outsourcing partner as the service provider is expected to comply with all statutory obligations in respect of the employee. The responsibility of the outsourced partner is to ensure that the outsourced employees are motivated, perform well and enjoy the same perquisites as conventional employees.

Ms Vanderhoeven noted that in recent times in the country, outsourcing non-core activities has been found to be a convenient option, allowing the organization to concentrate on developing their core business, core personnel and taking the organization to higher levels. She observed that today the employee mindset had changed. No longer do employees wish to be the "Long Serving Loyal Employee" The fast paced, young and qualified generation seeks employment that offers stability, career growth, good benefits and an equitable remuneration. These employees offer their advanced skills towards the business growth of the organization.

Having invested a lot of time on analyzing the outcome of outsourcing and working with companies that have outsourced employees and functions , Ms Soraya Saldin, General Manager - of Maritime Placements explained that outsourcing non-core areas of the business outside the premises of the principal employer has proved profitable in other angles too, such as releasing floor space, utilities and resources for essential personnel having moved out non core staff and maximizing on the organization’s time to concentrate on business development. Some areas of outsourcing are Accounting / IT / Administration/ Payroll/Front office /Customer service/ Janitorial and Maintenance.

Ms Saldin elaborated that outsourcing has its own issues, one being ascertaining the employment status of the employee by Law and identifying the legal employer. A Court would look into all elements of a contract to see whether an employment relationship exists or whether the worker is independent. The Wages Board Ordinance in Section 59A (3) provides for commercial establishments to make arrangements with any other person for the execution of the work of the commercial purpose outside its premises.

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