Drawbacks of Outsourcing

Outsourcing can provide considerable benefits to your company. However, there are definitely a number of drawbacks that you need to be aware of in order to make a good assessment:

• Management & Control Problems
  Effectively managing the operation of a department within your own company is challenging enough. Effectively controlling an offshore operation is difficult due to the geographical distance, time-zone difference, and lack of face-to-face communication.
• Failure to Deliver
  With external sources, you are trusting a third party to deliver a certain quantity/quality of deliverables. Should your provider fail to deliver, you are likely to suffer the consequences despite the Service Level Agreements (SLAs) you had in place.
• Exposure
  Outsourcing exposes a certain part of your business to a third party. Unless you completely shield your offshore operation, you might expose your company to a breech of confidentiality, malicious use of system access, and other vulnerabilities in your organization.
• Negative Reputation
  Outsourcing has gained a negative reputation and even though studies have proven otherwise, the general public opinion remains that offshoring eliminates domestic jobs. Your employees, clients, and partners might not appreciate the fact that you are offshoring certain business processes especially if that means that you are terminating a part of your domestic operation.
• Company Value
  The major risk of outsourcing is that you may not be building the value of your company in terms of personnel, in-house knowledge, and infrastructure. In this case, the value of an outsourcing agreement with a provider will be less effective than an internal department.

Overcoming these drawbacks will rely on identifying the right business processes for outsourcing, finding the best outsourcing provider, and setting up a good structure for your offshore operation. At MicroSourcing, we understand the level of trust it takes to outsource a process to a third party. This is why our first step in setting up an outsourcing solution is properly analyzing your requirements to see how the benefits of outsourcing can be maximized and the drawbacks minimized.