The Top Seven Outsourcing Risks and How to Circumvent Them

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One of the best ways to streamline your workload and save money at the same time is to outsource work from an outsourcing firm. The outsourcing industry has been growing every year since its inception, and it isn’t limited to small startups, as even the big-name corporations are making use of outside help. This isn’t all that surprising though, considering the benefits outsourcing has. It really is an effective strategy for reducing operational and recruitment costs, which also allows the other employees to focus more on core processes and increasing quality.

However, the cost-effectiveness of outsourcing is one of the biggest and most common reasons why companies opt to outsource. If you were to recruit new people, you would have to spend money for office space, training, benefits, and other operational costs involved in having a larger workforce. If you were to outsource work, however, the outsourcing firm would handle most of the costs, and your company would only have to pay for the man-hours, as well as any incentives that you and the firm agree upon.

However, despite the many advantages outsourcing firms give you, there are still some downsides to it. There are always risks, seeing as you are essentially entrusting a part of your company to another entity. Most outsourcing firms can be trusted, and as long as you choose one that is in line with your goals, and is a perfect fit for you and your company, you should be good to go. However, there are still some things you need to do in order to protect yourself and your company from these risks. Here are the common risks you take by outsourcing projects, and how you are able to circumvent them:

Different time zones

For some companies, this might not be an issue but there are many scenarios where having a different time zone than your remote team can be quite a hassle. For example, something urgent comes up. An issue regarding a work process that the outsourcing firm handles for you came up, but all the necessary members of your team are offline, because it’s 2:00 a.m. in their time zone. You would have to call them to try and wake them up, and if that doesn’t work, you would then have to wait until the next day to resolve the issue. This kind of unpredicted delay can throw a monkey wrench into your work process, which might even result in the failure of the project. A good way to avoid this scenario would be to have the people on your remote team be ready to answer your call at any time of the day. Some companies even utilize multiple shifts in their outsourcing firms, so there would always be someone to field concerns 24 hours a day.

Language barrier

English is the closest thing there is to a world language. There are 1.5 billion people who speak the language to some degree, and many countries use English to communicate with foreign governments and business partners. However, there are certain times that no matter how fluent someone is, they wouldn’t understand the context of what you say simply because English isn’t their first language. Nuance and idioms are sometimes hard to teach, and since outsource work needs clear communication to function effectively, this is a cause of concern for many companies. A way to avoid any misunderstandings would be to make sure the outsourcing firm being chosen has a high level of English proficiency, or any other language that you might prefer.

Losing control

Another downside to having a part of your company being handled at a different location is that you are going to have less control over it. Even if you simply outsourced work to a firm down the street, the fact that you are not there at the site itself or are not directly in control of the workers on that project, you will still have diminished control over the whole thing. How much more if your chosen outsourcing firm is on the other side of the planet? A good way to get past this obstacle would be to build strong relationships with the remote team by enhancing communication. Good communication is key, so choosing an outsourcing firm known for good communication would be wise. If need be, you can even visit the remote site from time to time, to really ensure the project is running smoothly and as planned.

Pixabay photo by Mohamed_Hassan

Relying too much on the outsourcing firm

One of the most important things you have to keep in mind as the decision-maker of a company that is making use of outsourcing services is that your office is the main workforce. The outsourcing firm’s site is simply an offshore office, if you will, with a remote team handling a certain project or process there. In the end you are the one who calls the shots, and you should be able to pull out any time you want. That is why one of the worst things you could do is to outsource a key project to another firm. Key projects are the main source of work and are most likely the project that keeps most of the company afloat. If you were to ship out the work for this key project, you would most likely be dependent on the outsourcing firm, and you wouldn’t be able to change firms because of this.

Data security

Another pressing concern when you are outsourcing work to a different company is that you will most likely be sending over sensitive information that is pertinent to the tasks that the outsourcing firm is assigned. Although this is definitely needed for the remote team to function efficiently, you still need to follow some guidelines in order to make sure the data being sent over is as safe as possible.

Some projects have more sensitive data than others do, but it should be a rule of thumb to still be vigilant and double check everything for every outsourced job. You should make sure to leverage some data monitoring and tracking software, as well as make use of a robust and clear-cut security policy. Educate the outsourcing firm on how to properly handle the data, and make sure they are unable to send it out to malicious entities that could use the information to potentially harm your company.

Little or no technical documentation

The technical documentation is the one thing that will determine the course of the entire project. It sets the expectations of what the outsourcing firm is supposed to accomplish, at what point in time it is to be done, and other details. Basically, it is the roadmap for the remote team that can help avoid any issue. Because of this, it is expected that the more detailed a technical documentation is, the more likely the project being outsourced will succeed/get accomplished without a hitch.

The less details, the more unsure the remote team feels, and that might result in the output not being what was expected, or even be delayed. Therefore, it is your job as the main company to lay down the technical documentation as detailed and clear as possible. Do not hesitate to ask the outsourcing firm what they think and answer any questions they have in turn. This will avoid potential roadblocks down the line and will ensure the project will be completed on time, with all the requirements met.

Hidden charges

Now this might be unexpected, and some might say that this is very unlikely to happen. However, we mean a different kind of hidden charge. Say, for example, the outsourcing firm you’re going with charges standard rates per worker. However, there are some unscrupulous firms that, instead of hiring the required professional for the project, hire somebody unqualified so they can save money on payroll. The less qualified a person, the less the firm pays them, and the less the firm pays them to work your project, the bigger their profit margin from the deal with you. You need to make sure you are part of the screening process when the outsourcing firm hires members of the team so you can control who works for the project.

The ultimate way to circumvent risks

When all is said and done, one method you can do will ensure you avoid all of the aforementioned risks: choose the right company. Let’s face it, even if you were to do everything we mentioned before, but fail to choose a good outsourcing firm, you would still be open to risks. Take the time to do detailed research on the company before going with them. Take SquareFish Inc. for example. Check out what the previous clients have to say, and see some of the projects we’ve worked on, and you can easily tell if we’re worth hiring or not. Contact us today for a free quote.