The Drawbacks of Outsourcing

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

• Management & Control Problems
  Effectively managing the operation of a department within your own company is already challenging. Managing and effectively controlling an offshore operation is even harder due to the geographical distances, time-zone differences and lack of direct communication.
  
  
• Failure to Deliver
  By using external sources, you are trusting a third party to deliver a certain quantity/quality of deliverables. Your provider might fail to deliver in which case you are likely to suffer the consequences regardless of the Service Level Agreements (SLAs) you have in place.
  
  
• Exposure
  Outsourcing always exposes a certain part of your business to a third party. Unless you completely shield your offshore operation, you might expose your company to the potential dangers of breech of confidentiality, malicious use of system access and other vulnerabilities in your organization.
  
  
• Public Opinion
  Outsourcing has gained a negative reputation and even though some studies have proven otherwise, the general public opinion is still 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
  By outsourcing, you are not building up the value of your company in terms of personnel, in-house knowledge and infrastructure. In the end, the value of an outsourcing agreement with a provider will be less worthy 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 an outsourcing solution always starts with properly analyzing your requirements and seeing how the benefits of outsourcing can be maximized and the drawbacks can be minimized.

In the next section, we will have a look at the way that outsourcing solutions can be modeled and the factors that determine the build of the outsourcing model