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Risk Factors in Outsourcing Today

by: Admin

Wednesday, November 17, 2010 | Outsourcing News |

Outsourcing Risks

The risks and disadvantages of an offshoring platform are critical factors that must be accounted for during the development and implementation of the operation. A wide range of delivery models, varying in terms of risk, control, and cost, have been developed by service providers all over the globe. The different outsourcing strategies in the industry landscape today, alongside different kinds of data security needs, increase a company’s exposure to risk when it comes to operational failure. As such, organizations must exercise due diligence in evaluating the downside of multiple delivery channels.

Indy Banerjee, Partner, TPI Cloud Computing Business Solutions, lists the top 5 risks that organizations should prepare for in order to ensure the success of an offshore operation:

Organizational. It is important to look into a company’s internal processes because it may be the case that these are not flexible enough to adapt efficiently in the business climate in other geographical locations. This can pose a threat since conflicts and procedural issues may arise if a company’s internal processes are not customized for global operations.

Programmatic. Can you maintain current enterprise and customer servicing requirements in a dynamic and global environment? Services, people, supplies, and other requirements that allow any business to run smoothly can be sourced from different channels. In this environment, it is essential to the financial viability of the firm that programmatic details are ironed out.

Domain. This area of concern deals with a firm’s dependence on outsourcing and its detrimental effects on technological capabilities, operations knowledge, and intellectual property.

Delivery model. Is the delivery model utilized for business processes strictly in place? Is it well-faceted and reliable to endure the risk of outsourcing to a single geographical area? Over reliance on a single service provider and delivery model can potentially burden you with 100% of the business risk.

Operational. Are contingency plans and business continuity plans in place to make sure operations run smoothly in the event that unexpected pandemics or destructive natural phenomena occur? Operational plans have to include the occurrence of unplanned events because of the current ever-changing environment.

Preparation to safeguard your business against these risks entails a constant and consistent effort to adapt. A complete model that takes different global sourcing options into consideration including a risk management program can make a difference in securing the success of a globally operating offshoring model. 


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