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Advantages and Disadvantages of Offshore IT Outsourcing

by: Sarah Joson

Tuesday, July 28, 2015 |

People still have different opinions when it comes to outsourcing. Despite it being recognized as a great solution to restore business operations right after the last global economic downturn, a lot still criticize its impact to local economies, particularly the United States.

BizJournals.com shares the advantages and disadvantages of having an offshore IT outsourcing operation:

If done correctly, it is still one of the best solutions to reduce operational costs while adding value to your company. Other advantages include:

Advantages of IT outsourcing

Reduce stress and hassle.
Most outsourcing service providers have in-house project managers who will report to you all the details and progress of the project. Knowing that you have experts handling your projects is one less thing to worry about and you have fewer things to do on a daily basis.

It will streamline your processes.
Since you now have more time, you can now look into the more important functions and processes of your business. You no longer have to manage each and every division since service providers will manage it for you. All you have to do is develop strategies and run marketing campaigns to help your business grow without fixating on the small stuff.

You have control on your capital expenses.
Infrastructure takes up a huge chunk of your capital expenses, and if you outsource a certain function, the service provider will most likely have the necessary tools to get the project going.

You are not alone, you have a partner.
Your outsourcing partner is there to tell you whether a decision is too much, or which areas you can improve on. Also, they are there to help you address challenges you encounter which means you will be sharing not only successes, but risks as well.

Unfortunately, outsourcing still has disadvantages due to the fact that the industry is evolving, and service providers are continuously catching up with the changes. These are the areas that need to be improved:

Data and information security
Since a lot of data are transmitted during an outsourcing contract, concern over the security and proper dissemination of important information has always been an issue for the industry.

Clients are unimpressed with the output.
There are still a large number of clients who express their dissatisfaction with outsourcing service providers. They are usually the ones who go for the cheaper vendors and expect to get top results. To avoid this, look for a vendor with a proven track record and testimonials from happy customers.

Some providers lack proper customer support.
Some providers are known to be showstoppers during the pitching stage, but months after the contract is signed, red flags appear. Most outsourcing relationships fail because the provider overlooks their customer support and forget that they have to pay attention to their clients.  

Some contracts incur questionable charges.
Some contracts incur charges due to unavoidable instances such as external threats stemming from developed nations, and unexpected changes in the markets. You can avoid these by setting a clear outline of costs and imposing margins to shoulder sudden changes.

Cultural and communication challenges
Sometimes, regular online meetings and chat sessions are not enough to align the campaign. Sometimes, providers miss a step, or the client forgets to explain an additional change in the process. To have a smooth operation, set clear orders before the start of operations and make sure that both parties agree and understand the processes and expectations.

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