oh were Outsourcing is the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in- house by the company's own employees and staff. Outsourcing is a practice usually undertaken by companies as a cost-cutting measure. As such, it can affect a wide range of jobs, ranging from customer support to manufacturing to the back office. Outsourcing was first recognized as a business strategy in 1989 and became an integral part of business economics throughout the 1990s. Outsourcing benefits Some of the outsourcing benefits include: Lower labor costs You can lower your business's labor costs by outsourcing specific functions to other companies. The third-party organization hires the employees to perform the tasks and is responsible for their pay, benefit packages and training. This allows your company to focus its labor costs on your core staff. Larger talent pool When you outsource to specialized companies, you can take advantage of a larger talent pool. These companies have access to candidates in other parts of the country or the world depending on where they are located and how many of their positions are remote. The contracting company will also have its own recruiters to find the best candidates for the tasks or prescreened employees that might have the skills needed for your tasks. Internal staff development A large project may require skills that your staff does not currently possess. On-site outsourcing, where you bring in contractors to operate at your own location, can let your employees work beside talentedcontractors and acquire new skill sets. Outsourcing can also help you focus on training and development for internal employees while outsourced employees handle everyday tasks. Increased efficiency Outsourcing allows you to move unnecessary functions to more specialized sources, Shifting those functions to companies that specialize in those tasks can lead to greater productivity, efficiency and cost-effectiveness, Your company can increase efficiency by concentrating on hiring, training, facilities and other resources within your core business model. Many times, outsourced employees bring standard processes that they can use to optimize efficiency. Disadvantages of outsourcing There are several potential disadvantages of outsourcing including: Limited control and flexibility When you outsource tasks to another company, you may be limited by rigid contract agreements. You may have less controlOver'sot tware, procedures and protocols, hiring practices and scheduling. Qutsoureing can also limit how much flexibility your-business-has-to-maneuver-as your-company-grows-or-changes-arise. Consider browsing for different opportunities with several agencies and negotiating terms-that.can best fityour-business needs. Decline in employee moraleOutsourcing may affect your company culture, especially employee morale. If your employees don't understand the need for outsourcing, they may feel they are being replaced while employees may become frustrated as workflows become more complicated, especially if the contracted company is in a different time zone. To fight this, you can encourage employees by offering training opportunities in other areas that can help them excel in their role. Open communication about how outsourcing can help them and the company goals can also encourage more positive outlooks on this. Decreased security Outsourcing can make data security more complicated. Outsourcing usually involves multiple sites using technology to connect and share information, which can lead to more opportunities for data leaks. Your business will also have less control over hiring and employee protocols, limiting your control over the information those employees have about your company. Consider reviewing data agreements and ensuring any tools you have are compatible with the other company's to minimize any risks. What Is a Stakeholder? Astakeholder is either an individual, group or organization that’s impacted by the outcome of a project or a business venture. Stakeholders have an interest in the success of the project and can be within or outside the organization that’s sponsoring the project. Stakeholders are important because they can have a positive or negative influence on the project/with their decisions. Stakeholder vs. Shareholder / s* ove? Stakeholders are not the same thing as shareholders. A stakeholder can be a wide variety of people impacted or invested in the project. Forexample, a stakeholder can be the owner or even the shareholder, But stakeholders can also be employees, bondholders, customers, suppliers and vendors. A shareholder can be a stakeholder. A shareholder, though, is someone who has invested in a corporation through the purchase of stocks. A stakeholder has an interest in the corporation’s overall performance, not stock performance. Types of Stakeholders Stakeholders can be anyone with influence or anyone who can be influenced by the project. We've already seen that there can be many stakeholders, something that we'll discuss below. All stakeholders can be broken into two groups: internal stakeholders and external stakeholders. Let’s take a look at both. 1. Internal Stakeholders Internal stakeholders are within the organization. The project directly impacts them as they serve and are employed by the organization managing it. Internal stakeholders can include employees, owners, the board of directors, project managers, investors and more. 2. External Stakeholders External stakeholders are outside of the organization and are indirectly impacted by the project. They’re influenced by the organization's work but are not employees of the organization. These people can be suppliers, customers, creditors, clients, intermediaries, competitors, society, government and more. Stakeholder ExamplesAs we mentioned, there are many types of stakeholders, many of which fall under the internal or external stakeholder categories. Let’s take a look at some of the more common stakeholder examples. Investors: These are stakeholders looking for a financial return and can be shareholders and debtholders. They have invested capital in the business and want a return on that investment. Employees: These stakeholders rely on their employment and job security. They have a direct stake in the organization as it supports them and provides them with benefits. Customers: These stakeholders want the product or service that the project delivers and they expect it to be of quality and contain value. Suppliers and Vendors: These stakeholders have their revenue tied up with the project as they sell goods and services to the business managing the project. Project success means more business for them. Communities: These stakeholders don’t want the project to negatively impact their health, safety or economic development. The organizations that are housed in their communities or working on projects in their communities can impact job creation, spending and more. Government: These stakeholders get taxes and gross domestic product from a project. They are major stakeholders as they collect taxes from both the company on a corporate level and individually from those it employs.