In both small start-ups and big corporations, outsourcing is becoming more popular every year. And there is no surprise as this is an effective management approach that helps reduce employee and administrative expenses, improve efficiency, enhance productivity, and introduce new ideas. In addition, it is a great way to recruit skilled professionals to work on your project without agreeing to a lengthy contract.
According to one survey, 20% of companies opt for outsourcing to improve the quality of work. While 26% opt to minimize the cost. Some studies show that outsourcing has led to increased customer satisfaction rates and improved interaction. It is also an effective way of improving the customer service experience.
It comes with a lot of perks, but it also has many pitfalls that can easily side-track your business venture. In this blog you will get to know the risks associated with outsourcing and some of the ways that you can prevent them, so you don’t lose the quality while getting the most bang for your buck.
1. Loss of Control:
When entrusting a project to a service provider, nobody wants things to go wrong. Poor coordination and absence of oversight lead to unanticipated expenditures that can make your product more expensive.
So, how can you control it? You must manage the workload equitably between your organization and the contracting agency. Create a good working relationship with the outsourcing company by communicating effectively.
You should also ensure that your in-house staff understands how to deal and coordinate with the outsourcing team. When you are selecting the outsource service provider, choose one that uses reputable tracking systems and offers open and transparent communications.
2. Time Difference:
The emergence of technology and the rise of the internet have reshaped the world dramatically and turned it into a global marketplace. These developments have paved the way for outsourcing and business development.
Still, there are a lot of challenges that a company has to go through. One of those challenges that come across when dealing with outsourcing service providers is the time zone difference. Let’s say you need help right away, but everyone on your remote crew is unavailable. In such a scenario, you will have to wait till the next morning to get the job done, which can lead to late delivery and even project delays.
To tackle this issue, you can coordinate with your team to work at night hours, in this way you will get all the vital tasks done first thing when you come to the office. This ensures a smooth workflow and better work relations.
3. Language Problem:
As you can see, effective outsourcing depends on clear communication. A team that does not understand your lingo will have communication problems and unable to meet the deadlines. To avoid getting into trouble, consider the location and language of the outsourcing service provider.
Ask them clearly before hiring them about the fluency in the requisite language, ensure they can communicate with you effectively with clear vocabulary.
4. Hidden Charges:
In the event that you choose to outsource your business, you surely know that this method of business collaboration is highly cost-efficient. The problem arises when the service provider charges you to fix rates, but recruit inexperienced professionals, which will end up costing more money than saving. Because lower employee costs translate into higher revenues for the company, it is evident why. But inefficient employees can lead to a bad outcome for your project.
During the financial planning stage, a thorough business evaluation is required to account for all possible charges at each stage. You will then be able to determine the exact savings your company could enjoy from outsourcing. Moreover, you can control the remote team using the “cost-plus” model. You can determine their salaries and choose from a range of specialists. That is also an efficient way to keep track of finances.
5. Lack of Technical Documentation:
As the entire course of a project depends on good technical documentation, it is essential to prepare it thoughtfully. It serves as a guide to avoiding pitfalls and risks for the team. The more thorough and detailed your technical report is, the more accurately you’ll be able to carry the project.
To prevent failures and misunderstandings, ensure that technical content is written clearly, and include all the information you need. Ask questions whenever you need clarity. Technical documentation does not have a standard structure; it varies with the project and service provider.
6. Data Confidentiality:
It is crucial to hire an experienced company that is reputable to protect sensitive data during communication. When the project deals with highly confidential data, security is especially important. If this is the case, you’ll benefit from conducting a preliminary investigation on the supplier and researching their security record. Don’t be afraid to ask about some case studies that explain security protocols and provide evidence of how previous projects dealt with confidential details.
7. Outsourcing The Key Project:
It is quite risky to outsource the major task. By collaborating with independent contractors, you can become reliant on the vendor and lose control of the process. If you don’t want to take this chance, keep the project in-house. Moreover, keep managerial duties on-site.
