LIMITATIONS/DEMERITS OF OUTSOURCING:
(1) Outsourcing leads to job loss in the organisation. Large scale outsourcing leads to unemployment to people within the country and outflow of funds from the country in the form of fees and service charges.
(2) Outsourcing brings creeping privatisation in the public sector organisations’
(3) Difficulty in deciding what and how much to outsource.
(4) Dependence on supplier for vital components is undesirable and may prove dangerous to the main organisation where outsourcing is substantial.
(5) Difficulties in managing new relationships with the outsource agencies.
Due to recent recession in the USA and European countries, the general opinion was unfavourable to large scale outsourcing. The Obama Administration has imposed restrictions and financial pressure on companies which are outsourcing to countries like India. However, companies from many countries including USA continued the practice of outsourcing because it proved economical to them. India is favourable to outsourcing because our IT and other companies get business as well as high profit due to outsourcing practice. India has immense potential as more than 80 per cent of fortune 1,000 companies are discussing HR outsourcing as a way to cut costs and increase productivity
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