Outsourcing Risks And How To Avoid Them

Today such business model of cooperation as outsourcing is becoming more and more popular. With all the bonuses outsourcing provides it can be a smart business move and bring your company a high profit. Big enterprises, as well as small companies, choose this business strategy to reduce the recruitment or operational costs, increase quality and focus on internal company processes.

Outsourcing Risks And How To Avoid Them

Outsourcing has proven it can be an excellent opportunity to involve talented specialists without long-term commitments. Some other benefits of outsourcing are:

  • Flexibility
  • Ability to get better services
  • Lower tax rates
  • Ability to focus on core business processes
  • Reduced payment
  • A possibility to free up the internal resources

One of the most popular spheres where outsourcing is widely used is IT. Companies that lack particular expertise or are looking for a significant reduction of their development search for their partners overseas.

Apart from a high number of benefits offered by outsourcing, this practice is also associated with specific risks. Regardless of how experienced your outsourcing provider there is still something you cannot keep under control. In this article, we tried to clarify the main outsourcing risks and best ways to avoid them.

Risk 1: Lack Of Control

When you outsource a project to someone on the remote basis, you cannot keep an eye on everything that happens as you are not actually “there” even if you are online. You cannot keep under control every aspect of the development process, and even if you can, you still should not forget about the main factor that might influence the development result, which is the human factor. So, trust is something your control will partially be based on. However, your trust should be confirmed by the vendor’s reputation. So, when choosing an outsourcing company, pay attention to the following:

  1. Company website/portfolio/profile.
  2. Services the company offers.
  3. Development approach: methodology, management, communication process.
  4. Technology: languages, infrastructure, software, etc.
  5. Tools.

 

What you can do to minimize the risk to lose control of the whole process is to start with building a stable business relationship, based on trust, honesty, and motivation of both sides. Make sure your vendor uses time-tracking tools if you are working on per hour rate basis. Other project management tools where you can control the process or assign new tasks as a team member would also be helpful. Strong communication is another critical factor to help you. So, set up a daily and weekly reports or discussions when you will get your legal updates without feeling you are pushing on your team.

Not Enough Of Involvement

Risk 2: Not Enough Of Involvement

Despite the widely spread belief that outsourcing will free you and your team for other business processes is not entirely correct. No matter how good your outsourcing provider is, you need to stay involved in the process and behave as a member of the team.

Try to be online during the working hours of your team and be quick with a response. Sometimes a short answer can save time and help to avoid a mistake in future. Keep up with the changes that happen in your project.

Risk 3: Data Security And Confidentiality

The first thing you can do to protect your future project data is to choose a reliable partner with a proven track record of previous successfully finished projects. Reputation on the market is a valuable advantage no one would like to risk. You can contact past clients of your potential vendor or ask for references.

If you want to protect your project from information leakage, you can sign a non-disclosure agreement. Such agreement in case of a trial should have legal force for both sides.  

Risk 4: Quality Compromising

Portfolio stuffed with smooth, flawless works, perfect references from clients and clear, robust code samples still do not guarantee you would get the same quality level as you expected. Even if your outsourcing provider has got in-house QA does not mean you will be satisfied with the general level of quality you might get. You are the only one to decide whether or not the received product corresponds your expectation about high quality. What you can do to secure yourself from possible failure is to ask your project manager for the recent code sample of your project. If you have your in-house QA, you can check the code through your company. If no, hire an independent 3rd party QA to review the code. The sample should be accurate and error-free, or at least the same quality as the samples sent you in the beginning as a proof of experience. If you are not satisfied with what you got, ask your team if they can change the developer for a more experienced one.

Time Zone And Other Differences

Risk 5: Time Zone And Other Differences

Different working hours, holidays and days-off schedule can be a crucial obstacle in building a working relationship with someone in different time zone. If you are outsourcing a project to the overseas provider, you should be ready to adjust your working timetable according to your team or at least be available for a specified period during their working hours. Not being online when necessary you risk losing the control over the development process.

The language barrier can be additional difficulty when working with someone speaking English as a second language. When choosing a provider make sure your future contact person such as project manager speaks a clear language so that you won’t face misunderstanding in future.

Mentality and other cultural differences may be another factor influencing the general style of your partnership. So, when interviewing your prospective provider, make sure you will be able to find a common language apart from English. Your partner should understand your business, have a similar vision on work process and same goals. At the same time try to get rid of your might be prejudice, meeting someone from different cultural surrounding can be fun.

And Ukraine is an ideal place for outsourcing app development services. More information on outsourcing in Ukraine, you can find here.

 

Hidden Expenses

Risk 6: Hidden Expenses

One of the main advantages of outsourcing is usually lower cost. However, you can spend much more money if you miss several things. The first thing you should take into account is a business model the company offers. Is it a fixed price or an hourly rate? For example, a company charges a fixed rate for a certain amount of work. The quality you get by the end is not the one you expected, and you ask for additional work, be ready to pay extra as initial scope of work did not include these fixes. This can be a tricky thing, and as a result, you spend twice as much compared to initial cost. So, don’t get fooled by a low price for a fixed amount of work.

Choose a company with a transparent work scheme and ability to choose an hourly rate. Time-tracking tools will help you to keep an eye on the working hours and your expenses. An option to work according to an agile methodology of development can be a big plus if you want to keep your costs under control.

CONCLUSION

Outsourcing can be a good positive experience if you take care of eliminating or at least minimizing possible risks. Ability to identify and keep under control all potential areas of failure can get you the maximum benefits from outsourcing.

Post Author
Lucy Orloski
Lucy Orloski, Content Community Manager in SEOHeights, a Canada based digital marketing company, has worked in a number of capacities in marketing since 2008. She provides consultancy for increasing traffic through search engines, social media, email marketing and improving the site and page conversion rates to increase sales using existing visitor traffic. If you want to increase traffic, sales or want branding of your business then contact me

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