What are the advantages and disadvantages of outsourcing to Low Cost Countries (LCCS)? How can the risks of outsourcing be mitigated?

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Outsourcing to Low-Cost Countries

Companies all over the world, especially those in the developed economies outsource to low-cost countries for many reasons. Most of those reasons allude to the advantages of outsourcing operations and other functions of production to other countries. The developed economies such as the United States outsource to low-cost countries such as Mexico and China due to the low costs. These low costs countries are cheaper in terms of labour, raw materials, and taxes among other things (Gylling et al., 2015). Ideally, the culminated cost of production in low-cost countries is significantly lower than when production is conducted in high-cost countries. As such, the main reasons behind outsourcing can be judged to be the low costs associated with almost all aspects of a low-cost country. 

However, there are disadvantages associated with the act of outsourcing. These disadvantages mainly originate from the lack of an established regulatory system, different modes of transportation, warehousing issues and export and import limitations (Sajjad et al., 2015). Ideally, these are challenges that might not have been faced if the company or organization had settled on domestic sourcing. Furthermore, the infrastructure differences that occur create logistical problems as goods are moved from one country to another. In the end, the cost of production is relatively cheap but would have increased due to the additional costs that cover up for the lack of proper infrastructure and presence of significant logistical problems (Wisner, 2016).