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risks of outsourcing

7 Risks of Outsourcing You Should Definitely Watch Out For

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So many people might think of it as a relief to run their own business. To think of being a mere employee as being a “yes sir!” guy doesn’t go anywhere. They might even believe being the manager of a project mean leaning back and enjoying the sight of others working and sweating for their benefit. But the truth is that breaking free from employee-related worries never ends. You might think you no longer have to bear the pressure of delivering an assignment right on time when you run a small business or a startup but you would be wrong.

The truth is, overwhelming responsibility and workload of owning even a small business can be so much to make you wish to go back to being an employee again who works for paychecks and doesn’t need to hassle about getting zapped by constant threats to different parts of its business as risks of outsourcing or not.

Today’s world of booming startups and flourishing small businesses has created a fiercely competitive field for young managers who are trying to put an idea into motion and sometimes don’t quite have all the resources they need to keep their edge in the market.

One of the solutions that’s been around for some time now and has not made the big break it was promised, is outsourcing.

So, what are the risks of foreign outsourcing? That’s what we're here for.

Risks of outsourcing mean trusting an outsourcing partner with a part of the job that otherwise would bog you down with unreasonable man hours if you would want to do it yourself, and the perils that might come along with it.

Unlike many sources you might bump into when you look up outsourcing on the internet that go on a spiel about the benefits of outsourcing, here we want to flip the coin over and scour for the threatening risks of outsourcing that might pose a serious danger to your business, no matter how big or small it is.

We discuss benefits and risks of outsourcing that have been holding the trend back from being the once-thought blockbuster it was expected to be. We want to uncover the whole story by investigating reasons that have made a group of middle size business firms have second thoughts about it when they consider the risks of outsourcing.

Finally, we’ll say if all the buzz around outsourcing is doomed to failure or if there’s a safe path to go about it and still stay clear of the risks of outsourcing.

Here is an insightful and impartial look at the risks of outsourcing and how to avoid them.

Your firm’s long-term interests might get hurt

Cynically put, dependence might mean liability and would be at odds with self-interest for your firm that’s trying to secure and expand their hold in the market.

On a broader scale, one of the risks of outsourcing might mean dependence on foreign labor which would raise patriotic or security concerns. One of the reasons for the built-up resistance, especially against outsourcing overseas is that.

As a solution, insensitive parts of your project, which in the architecture realm might mean anything as far as you’re not the contractor for a secret military project! That could be considered a way to avert risks of outsourcing.

Lack of deep knowledge of your own product could cost you your business

One of the most major tenets that might seem both like benefits and risks of outsourcing is the fact that by leaving each section of your project to your outsourcing partner, you’re disentangling yourself from the bottom-line job.

That might seem like a relief, but you are also distancing yourself from the deep first-hand knowledge and consequently control over your own product.

That might pose threats and cost you your leverage with your customers when need to make adjustments based on their will.

The solution to avoid these types of risks of outsourcing might include outsourcing parts that have less to do with your native home-grown knowledge of your product and only include phases like the presentation or labor-intensive calculations.

Chance of intellectual property leak or other forms of business abuse

Depending on your outsourcing partner’s place of residence (which sometimes could be far away by the way) you will need to make sure their intellectual property protection laws are up to your own standards.

As one of the benefits and risks of outsourcing, just like a two-edged blade, these firms don’t work for a single client and your data in their hand might mean giving up all your leverage to your competitors on a silver platter through an untrusting outsourcing associate.

Of course, this doesn’t mean all business process outsourcing companies will do it. You just have to be wary of the risk and make sure your partner’s trustworthy.

Take a look at how we tirelessly tend to our customer’s need as an established outsourcing partner.

Overhead logistic expenses have to be foreseen

The actual distance with your partner might be one of the biggest risks of outsourcing too. Aside from ineffective communication and their insufficient knowledge which we will get to in a second, long distance relationship as we all know it, needs special care to work smoothly.

You, as the manager of your own business, you might require to appoint employees to oversee your partners’ work offshore. That is not cheap for sure since you might need to offer premium pay for the job as an effective incentive.

Logistic issues like good transfer can be tricky and cost way more than you initially expect; especially when manufacturing is your product instead of services.

So, make sure you check the expenditure for offshore shipping before you choose your outsourcing partner.

Plus, if you think about it, this could be a source for both benefits and risks of outsourcing cause the time difference could practically help your job’s progress within a full day when half your staff is always working.

Ineffective communication

Patriotic or national security concerns might seem like a bit of a stretch, but one of the most raised risks of outsourcing that’s withholding its full big break is unproductive, unwieldy communication among the employer and the business process outsourcing company you’re choosing.

Of course, not all outsourcing firms are perfect and live up to world-class standards. So that might be why a lot of sources have voiced ineffective and frustrating communication with an outsourcing firm that makes the employer forget about their decision altogether.

Foreign-based outsourcing partners don’t know your ways

Let’s imagine you’re carrying out a building project in Ontario, Canada, and you are thinking of outsourcing a part of your structure design to an architecture outsourcing company overseas where they don’t particularly have too many trees and so not a lot of lumber around for sure.

One of the biggest risks of outsourcing might be that your partner probably wouldn’t have their way around design with timber and that would mean longer delivery, faulty final results on the first try, and missing deadlines for the revisions that follow.

The inadvertent lack of knowledge by business outsourcing partners that are unfamiliar with domestic ways in design and building has been cited as yet another reason for companies to avoid outsourcing, decades into its initial boom.

You can make sure you’re not handing your project to the hands of an inept partner by choosing among the fit.

Only medium steps over the course of a project can be outsourced

Outsourcing will be for nothing if the outcome of a trusted outsourcing partner had to be over-checked and repeatedly handed back and forth for revisions.

So, as one of the traits that could be counted as both the benefits and risks of outsourcing, parts of a project that are too subjectively reliant on your firm’s special touch and style certainly can’t be trusted with a third-party company.

Usually, final results that you present to your client can be outsourced and therefore, only routine stages of an outsourcing project can be handled by a partner and not the final result.

Conclusion

Outsourcing is not the solution for every overwhelming job your startup is dealing with. But given the specific circumstance and shortage of resource, it might be your best chance to get a hang of your firm the way you want.

As both benefits and risks of outsourcing, it cuts costs through less staff and office space and cheaper software and hardware run and support especially when you do services rather than manufacturing. It also offers competitive fees and more productive revision-proof handling of your project.

Although, inefficient communication, lack of knowledge through having different standards, and long-term dependency concerns might be the caveat to outsourcing; all of which can be properly taken care of by choosing the right partner.

Now you tell us. What encourages or makes you paused about business outsourcing part of the job at hand in your firm? Tell us about it in the comments section below.

Mitchel Sardy
Author: Mitchel Sardy
I am a Computer Engineer and an architecture enthusiast, graduated on both majors up to the master's degree from the University of Washington; I'm an advisor to early-stage architecture startups all around the globe; the ones using computer-based solutions to design in architecture.


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