Although, historically speaking, expansionism has found its end at the beginning of the 20th century, outsourcing seems to be this centuries main global phenomena, bringing thus further the legacy of its forefather; this time in a more economical manner rather than in a territorial one, as international companies now find themselves in pursuing their quests as modern day conquistadors of a global market, each one seeking supremacy in their own business branches all over the world.
So near-shore, offshore, no shore, little does it matter… because regarding this chapter, numbers and facts are definitely overwhelming: more and more businesses outsource; which isn’t necessarily a piece of cake. We couldn´t state that one has problems while outsourcing ones business processes, but one does certainly face some hardships while doing such. Because as lucky as it may feel to drop the costs, find more specialized workforce and thus start more projects, i.e. to work better, faster and smarter, it doesn’t necessarily mean that outsourcing doesn’t present any hard parts. That’s why we’re discussing these 7 difficulties companies encounter during outsourcing projects:
- Goodbye ‘hands-on’ surveillance
Fact is, outsourcing always results in a loss of managerial control and thus remains the nightmare of any control-freak management team. Still, weekly or even daily meetings usually occur to keep the client up to date with the project progress and to make sure that the agreed upon guidelines are also being respected, so that even someone who feels the need to personally be involved in the process, is also be satisfied. That is of course, only if the tools work properly, which brings me to…
We’ve come a long way since the Morse code, however there are some topics that still need to be worked upon and figured out, as we all know how a bad internet connection can ruin a perfect Skype meeting. I’m speaking here also about costs: travel costs for face-to-face meetings can easily exceed thousands of dollars in offshore outsourcing projects. Plus, smaller companies may even suffer on this as quality may decrease if investments in the communications sector fail to occur. The good news is, anyone can get decent quality with a minimal budget nowadays, so this shouldn’t be such a major problem. Here’s a big one:
- The Clash of Cultures
National/regional culture and corporate culture yet have a word in this commercial relationship where the two separate entities may differ in the way they view things. More often than not, a good collaboration is not about solely respecting the terms of a contract but rather about going that extra mile for the sake of your partner. So more than just strictly following a procedure, any healthy relationship usually means actually embracing and getting onboard with your partner’s business objectives, perspective and mindset (doesn’t only refer to companies), which is much easier to do when the cultures don’t differ that much. The good thing is that these past centuries helped us build more solid relationships, as phenomena like globalization, capitalism and democracy have led to a more homogenous mix of cultures. But there’s another kind of mix you need to face:
- A mix of risk and trust
Outsourcing means playing with fire. Yes, that’s a trustworthy company and yes that’s a good paying customer, however although all the legal frames have been set, just one ‘what if…?’ is enough to keep you walking on your tiptoes during the first years, if it’s your first outsourcing collaboration with a foreign third party provider. Problem’s not a pitfall though, since customer feedback is usually painfully sincere. What may bring you to a pitfall though, are:
- Blind costs and margins
As it is said and known, what you don’t know will certainly bite you at some point. With this idea in mind outsourcers draft their contracts thorough, yet still have some surprises in the long run. Everything, from staffing to currency fluctuations and hardware/software updates, can produce possible additional costs which may appear during such a collaboration and this is simply because one cannot foresee all potential changes within a partnership regardless of how well the terms are being thought through and respected. But forget this, because outsourcers have something else to be actually tripping about:
- Data Privacy and Security of Content
While sharing information with a third-party provider there is ultimately only one thing to keep an eye on: the safety of your data. Because information (and thus data privacy) is the blood of any organization and as it flows through it keeps the company alive on the market and safe from its competitors. Contracts of employees, who handle sensitive data, usually contain a no-competition clause nowadays, however that doesn’t stop anonymous leaks from taking place. Investment are made in this domain and quite mandatory in order to avoid such situations and trust is therefore a must in order to overcome this barrier. Either that, or spend 10 times that budget in court. But even so, no budget or court can protect you from this last threat:
- Failure to meet expectations
As good as outsourcing might sound in some cases, the situation is not always perfect. As the commitment comes from both sides, sometimes it feels like one of the sides is being cheated on. Many cases of delivery failure due to lack of flexibility or team incompetence have been recorded but it’s still just a matter of choosing the right partner. Making sure that the engineer is right for the job is part of the employment process, right? So the blame may be split here in both sides. Of course all firms lacking management skills, not having adequate processes and using wrong/useless performance metrics are reasons why outsourcing is being frowned upon.
Be as they may, many of these difficulties can be overcome by a strong, long-lasting relationship with a proven trustworthy partner. Make sure their headquarters are not too far away; and if they are and you decide to outsource offshore, try to get to know their culture and their way of seeing things first. Cultivate a relationship. Watch out for hidden costs and think ahead in order to avoid future, unforeseen difficulties. Draft a strong and valid contract with solid, yet reasonable terms. Be flexible, be decisive, be smart. Choose a suitable partner and in be a good partner in return.