Outsourcing could provide a reliable and cost-effective solution for enterprises regardless of their size and nature. It is a gateway for access to global technical expertise and many companies are looking into partnering with outsourcing company.
However, outsourcing does come with risks, and if companies are not aware of the inherent risks, it could end up costing more than the anticipated savings. Here are some outsourcing pitfalls to consider before entering an outsourcing relationship.
1. Lack of trust
If you are looking for an outsourcing partner and you are building that primarily based on trust, then that is more than likely going to fail. This can be overcome by either having a personal connection with someone you know and can trust and/or by taking the time to build the partnership with frequent visits, checking out the locations, meeting the prospective team members, etc. It takes time and money to start such partnership.
2. RACI
Most outsourcing ventures fail because there is no clear RACI defined. Many try to control and micro-manage the offshore team. This is almost a clear path to failure. It is very important to understand the reasons of going with any outsourcing partners (cost savings, regional presence, etc.). Ownership and with that Responsibility and Accountability will have to be shared. A company looking for an outsourcing partner can clearly define and understand the reasons, define the RACI and work on the governance model and set up a clear feedback and review structure to ensure increased productivity.
3. Quantity over Quality
Many large outsourcing companies go through a quantity hiring each year. It is not unheard of for news like ‘Company X is
going to hire 25,000 new graduates’. One primary reason for project cost overshoot is that a significant number of under-qualified/less productive members on the team can gradually slow others down. As a result, it is important to know and interact with the team and review the productivity levels of each team member. Having an open mind and same level of give/take can be helpful.
4. Churn
This is another important aspect when it comes to outsourcing. With so many options available, the employee churn and
retention is an issue. You should understand that a higher churn to what you are used to, is inevitable. However, you should invest some time to understand the competitive salary levels of the prospective partner within the local geography to ensure a higher employee retention.
5. Communication
This accounts for both written and verbal communication. For some outsourcing regions, communication may be an issue. The team members may be solid but may not be able to communicate. You may have to ensure that a critical team is good at both forms of communication. Additionally, you may look to invest in support tools like translators and interpreters.
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