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Top 7 risks of outsourcing and how to manage them

WOW24-7 Best Practices Top 7 risks of outsourcing and how to manage them
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What is Outsourcing IT?

Outsourcing is becoming more popular among small start-ups and big enterprises. A significant number of businesses choose outsourced customer service as an effective way of providing qualified customer care.

According to market research conducted by KPMG, app development outsourcing is the best option for customers who want to secure expenses without loss of quality. The statistic provided by Computer Economics shows that more than 45% of businesses that already use outsourced services will increase the amount of outsourcing workload in the future.

Outsourcing Benefits and Risks

The benefits of outsourcing are:

  • It is an efficient business strategy used to reduce recruitment and operational costs, focus on core processes, increase quality and bring in innovations.
  • Cooperation with reliable outsourcing services can increase customer satisfaction a lot.
  • It is an excellent opportunity to bring talented specialists to your project without having long-term commitments.
 

It is important to mention that your decision to outsource should be well-considered after accurate analysis. Although there are many perks, so are the pitfalls that can easily sidetrack your project. Therefore, what are the common risks of outsourcing, and how can you successfully avoid them?

What Are the Risks of Outsourcing IT?

The main advantages of outsourcing are cutting operational costs, concentrating on the core business processes and not on IT routine, and hassle-free compliance with any local or global regulations, among others. No matter the key objective, outsourcing causes a lot of controversy and worries in managers and business owners.

Thus, we decided to gather and dispel myths associated with outsourcing services to an external provider. Also, besides the possible risks of outsourcing, we will talk about the right scenarios of utilizing outsourcing to get the maximum of such services. These recommendations and information will be useful both for companies that stand against outsourcing and businesses that want to improve their outsourcing activities. 

Risk #1: Loss of control

No one wants to lose control over the project when trusting it to an outsourcing company. In fact, unclear communication and lack of visibility lead to unforeseen expenses that can transform your product into a costly one.

But how to keep control over it?

  1. Manage the outsourced project equally between your company and the service provider.
  2. Build strong business relationships with the outsourcing team by improving communication.
  3. Don’t forget to make sure that your in-house staff is aware of how to handle the outsourced project.
  4. Choosing the vendor, opt for the one that offers high transparency of communication with customers using reliable tracking systems.
 

The Ability of the Outsourcing Company to Nurture Your Project

Although many companies tend to brag about their expertise and readiness to start right away, how can one ensure that the chosen vendor is a credible, reliable company that will help your business to reach the desired goals?

Broken Promises

Every first outsourcing services provider talks about a huge experience in any field and dozens of experts working round the clock, but is there any proof to these sayings? It’s a normal fear to assume that the outsourcing company will not meet the initial requirements or even abandon your project amid development.

Here is how to protect your business from such customer service risks:

  • Check the provider’s website. If the outsourcing company can’t make a neat website for themselves, will they be able to build a high-end product for you?
  • Read case studies (if there are any). Reputable outsourcing companies always have case studies available to show the most successful cooperations.
  • Check reviews. It’s crucial to read what independent reviews about the services provider, like Clutch.
  • Talk to former clients. It is the best way to find out about the vendor’s credibility and professionalism.
  • Check social media. Does the outsourcing company keep its social sites up to date and share valuable information with the community? Does the services provider participate in global contests, local conferences, or IT events?
  • Visit the company’s office, if possible. Check how the vendor works, speak to people there, etc.
  • Set clear expectations and responsibilities in the contract. Prepare an agreement that allows your business to operate as per all laws and demands (NDAs, patent protection, and other necessary agreements).
 

Reputational Risk

These can include the hiring policy, employee treatment, environmental violations, and more.

Other important factors regarding the potential vendor include:

  • Costs and risks compared to hiring an in-house team/local contractors;
  • Time zone differences;
  • Cultural differences;
  • Transportation and logistics specifics (if relevant);
  • Documentation and law compliance;
  • Consulting costs;
  • Political and environmental stability.
 

Risk #2: Different time zones

The best way to avoid risks is to use Follow the Sun (FTS) strategy. Due to this model, the outsourcing team works on your task when it is a night on your side and sends the completed work in the morning. This process helps to reduce response time and make the workflow much faster.

Risk #3: Problems with language

Clear communication is fundamental for effective outsourcing. So if you don’t want to get into hot water, select the outsourcing company carefully and pay special attention to its location. Choose a service provider with firm guarantees. The company should ensure that remote staff would be able to keep in contact with you in the preferred language while working on the given project.

Risk #4: Hidden charges

The best way to avoid extra spending is to learn more about the potential hidden costs of outsourcing.

  • Make an in-depth business analysis to plan the budget, including all possible charges that can appear at any process stage.
  • You will find out an exact cost reduction that outsourcing can bring to your company by doing this.
  • Opt for a “cost-plus” model that allows you to control the remote team.
 

Risk #5: Lack of technical documentation

Preparing thoughtful technical documentation creates the roadmap for the team that helps avoid threats and challenges.

  • To avoid failure and miscommunication, ensure that technical documentation is written clearly, and all your requirements are mentioned.
  • Don’t be afraid to ask clarifying questions.
  • Do not follow any general standard, so the structure can vary considerably depending on the service provider and type of the project.
 

Thus, the more informative and detailed your technical documentation is, the more accurately your expectations as a client will be met.

Risk #6: Protection of data

The security issue is especially significant when the outsourced project involves sensitive data. In such a case, you should conduct a background check of the potential vendors and find out how they have dealt with security problems in the past.

Risk #7: Outsourcing the key project

Outsourcing the key project is quite dangerous. Starting cooperation with a remote team, you risk becoming dependent on a service provider and losing project expertise. To avoid these risks, don’t outsource the whole project. What is more, keep management in your in-house staff.

Myths About Customer Service

There always are two sides to the coin. So let’s break down some of the biggest outsourcing myths. 

Myth 1: It’ll save money but compromise quality

Recent research shows that the primary goal of outsourcing is no longer cost reduction. In fact, it massively increases the quality of customer care. For the last years, the industry has become a powerhouse of producing qualified specialists.

Brands realize that outsourcing doesn’t mean they are compromising the quality — they are actually upgrading it. Besides, this alternative way of delivering customer services can bring even better results than a traditional one.

Myth 2: There is no control over an outsourced team

Since business process outsourcing means that the employer won’t be present in the remote office, there is a myth that they have no control over the project. Otherwise, when you’re hiring a reliable outsourced company, you have all rights to manage your own customer services any time you wish. 

Cooperation with the right provider gives you access to dashboards, core metrics, and other parameters used to measure the success of business processes. You can also ask for a detailed analysis of delivered services and customer feedback.

Myth 3: The language barrier is a huge problem

The most significant centers of outsourcing aren’t located in the US. Thus, the common complaint about outsourcing is that the overseas agents won’t have the required language skills. 

The myth is busted. For example, Ukraine is one of the most popular outsourcing destinations. Why? Because here you can find both affordable prices and highly qualified customer support representatives with perfect English. 

Conclusion

Business process outsourcing is a strategic business activity. Today, some companies are surviving only because of their ability to delegate the right business activities to the right providers. A remote customer service that doesn’t keep its promises is not the right partner.

That’s why outsourced technical support from Wow24-7 performs transparently with attention to the tiniest details. We know how to provide our partners with exceptional customer care and make outsourcing effective. Hire our experts to find the best solutions for your business development!

Let’s discuss your business model to find the best solution​