Outsourcing ‘Bad for Business’?


Regular readers will know my position on offshoring/outsourcing in such posts as Things to Consider; What is a VA; What’s in a Name; and Confusion Continues.

I was recently sent a video (created by OnlineMBA.com) which raises another interesting thing to consider:  Why outsourcing may in fact NOT be valuable to business. Check it out:


Now, I won’t go so far as to agree that outsourcing is “bad for business”. After all I’m a virtual assistant and RELY on my clients to oursource their work to me! And the video is primarily talking about manufacturing.

But the final point which mentions the irony of outsourcing: “The loss of intellectual property that ends up strengthening competition” is one that all businesses who outsource should think about. If you’re sending your IP overseas, how are you ensuring it’s being protected? This is just one of the points I raise in my presentations on this topic, and a strong argument for keeping your service providers at home.

I do believe that the terms ‘outsourcing’ and ‘offshoring’ have unfortunately become synonymous/interchangeable. My business relies on clients who outsource work to me. Doing so is beneficial to them for a variety of reasons but ‘cost’ isn’t necessarily a primary one – unless you factor in staff on-cost savings.

My clients outsource to me because they see the value in the relationship I have with them and what I bring to their business.

Offshoring‘ on the other hand is primarily done by businesses wanting to save on bottom line.

I like how the video highlights that Chinese and Indian workers are beginning to see their ‘value’ and as such are beginning to increase their prices. This is something I warned about in a presentation I gave a few years ago on offshoring – I indicated in that presentation that clients looking to go in this direction should be honest with themselves about why they are doing it (bottom line savings) and not rely so heavily on the philanthropic aspects – I say if they were truly philanthropic they would be paying these people what they are worth, or based on what value they bring to the business – not an amount the client believes is commensurate with the cost of living in that country.

Let me know what you think of the video by sharing your comments below!

© Lyn Prowse-Bishop – eSOS



  1. Great blog post Lyn!

    As you say, the video does focus on the manufacturing industry but many of the points do relate to any business the outsources and/or offshores. It’s up to us to educate our clients on the pros and cons of offshoring so they can make informed decision. Unfortunately many (generalising I know) do just look at the short-term bottom line and not the long term implications of sending jobs overseas when we need to be keeping them onshore..

  2. Monika says:

    I can definitely see that Offshoring is bad for the local economy. I have known this for years and have watched this happening along with the government saying, “it’s ok, it’s a different world, we will lose some jobs and others will be created in it’s place”. Well other jobs haven’t been created in the place of jobs lost to offshoring. The quality of our goods has decreased dramatically creating the throw away society mentality that it’s cheap so we can easily replace it leading to the world’s resources dwindling at a much faster rate and huge problems with mountains of trash.

    Everyone should have the right to a job and to fulfill a useful place in society, with one out of every 5 youths without a job that’s not the case at present.

    It’s easy to hide under the banner of philantrophy but in many cases it’s all about more profits.

    Well done on the post Lyn.

  3. execva says:

    Agree with you both Mon and Anita. Hopefully we’ll see a shift back to quality – and ALSO traditionally ‘cheaper’ providers recognising their worth.

  4. Great post Lyn, I am going to bookmark it and your other Offshoring posts for future reference.

    I am in the process of researching and developing a post which will also end up as a white paper on the risk involved with offshore outsourcing for small business. The topics I will be focussing on are legal jurisdictions, insurance cover, data security, lack of regulations and protection against crimes such as fraud, embezzlement and scams.

    These crimes are universal but at least when you are dealing with your own countrymen they are accountable to the same laws and you have a better chance of justice if something goes awry.

    Big business have some protection because they can afford legal costs is something goes wrong but small businesses generally don’t have the funds to cover any potential losses.

    People in developing countries have every right to demand higher wages from their western employers and I am happy to see this is starting to occur. This is excellent news for businesses such as ours as it will level the playing field in more ways than short sighted profits.

  5. Cheryl says:

    Thanks LPB. Whilst I hate that term VA (mainly due to the fact that all my clients are “actual” rather than “virtual”, their outsourcing to my business has been beneficial to all concerned: they get professional service and I get happy clients and a busy day (and sometimes night).

    That said, great blog and thanks to Anita for tweeting it.

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