In offshoring, it is not enough that you identify only the benefits your company can get. While knowing the advantages will be useful in deciding whether or not to transfer work offshore, it is equally important to identify the risks or challenges related to offshoring. Weighing its pros and cons will help you make an informed decision. Here are some risk factors in offshoring:
- Communication barriers / difficulties
Service providers in offshoring locations can speak and understand English, but there are still instances when getting the message across becomes difficult. Of course, email and video conferences via Skype are helpful modes of communication, but you will find that nothing beats a direct, face-to-face communication.
- Unclear requirements
The lack of effective means of communication and regular updates may be some of the reasons both buyer and service provider fail to be on the same page when it comes to identifying the requirements. In some cases, one may only find out about it after sending the deliverables.
- Data security / Protection of intellectual property
Security issue is always a major risk factor in offshoring since it means the company will give the service provider access to the formerís computer systems. Also, there are business functions that pose higher risk when transferred offshore. By giving another company or individual access to sensitive data such as medical records and legal documents, there is a possibility of identity or data theft.
- Failure to deliver
It can be really frustrating if the service provider is not able to meet the requirements at the set date and/or the deliverables are not exactly what you have asked for.
- Cultural differences
The buyer-provider relationship can be affected by the differences in their traditions and customs. Not being able to successfully bridge the cultural gap will lead to major problems.
Companies have varying reasons for transferring work offshore depending on their business goals. Whatever the reason is, offshoring will only be effective and beneficial if it results to huge cost savings and high quality deliverables for the company.