Joint Ventures – Pros and Cons

The joint venture is becoming a popular way for companies that outsource their operations to retain a piece of the ownership pie. The creation of a new legal entity during the launch of a joint venture comes with its share of ups and downs.

On the plus side…

• Both the company and the outsourcer receive revenue and tax advantages
• Risks and rewards are shared alike
• The buyer of outsourcing services is able to exercise control over the outsourced operations
• There is also more transparency of operations
• Financial interests will ensure that both parties pay more attention and commitment to the venture

On the minus…

• This model demands more sophistication from the buyer
• Decision-making is slower
• Clash of corporate cultures of both parties involved in the venture can lead to disastrous consequences