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Disadvantages of outsourcing

Disadvantages of outsourcing

By BloggerKhan

My profession is Management and Marketing and it revolves around outsourcing, ecommerce and marketing on the internet. Wise men say identify what you are passionate about and then see if ...

By BloggerKhan

Posted in | Tags : ,

Outsourcing is not all a bed of roses and has it’s pitfalls. The key disadvantages of outsourcing are:

  1. Security concerns:
    If you are handling your customers personal information, you have to be very careful about maintaining the confidentiality of such data. You must make sure that your outsourced partner understands and upholds this confidentiality.Confidential information about your own business is another important area that you don’t want compromised. Before you outsource, you must consider ‘what if’ scenarios. How serious a blow it will be if your business secrets are compromised. Can you risk that?
  2. Communication:
    What you mean is not necessarily what the other party understands. You may ask for one thing and get an entirely different deliverable. In the initial phases of your association with a freelancer / contractor, use all communications methods like Skype or web conferencing to ensure both parties understand what the job is. Then monitor very closely on a daily basis to ensure that you are still on the same page. Once you have been working with a contractor for a while, then you can relax and things will get done the way you want them but be very detail oriented in the initial phases.
  3. Time Zone differences:
    This can be taxing on you and your contractor. Unless you are a big corporation with employees in multiple shifts, it gets very taxing on employees who are trying to respond and communicate with contractors in different time zones. It becomes a 24 hour job so you have to be careful how you address it.
  4. Screening Contractors:
    It’s not easy to check references and educational credentials of contractors overseas. However; portals like Odesk, Elance etc. have a feedback ranking for contractors and clients alike. That way both parties can check each others references based upon previous contracts.
  5. Productivity:
    A cheaper hourly rate does you no good if the contractor is lollygagging. Keep a sharp eye on the work being done and the time it is being done in. If you don’t have your guard up, people will take advantage of you. Some outsourcing platforms like Odesk have a software utility called ‘snapshot’ that takes a picture of what the contractor is doing at random intervals. The ‘snapshot’ runs on the contractor’s computer and keeps reporting back to Odesk what was on his screen. You can review the same pictures whenever you want to and monitor work accordingly.
  6. Quality control:
    This is one of the toughest to measure and monitor remotely. Unless you are a bigger company and can have your own representative on location, you have to rely totally on the contractor. Again, constant monitoring and feedback helps. If you want to evaluate at the end of the project, it may be too late. You may withhold payment but that does not cover you for time lost.
  7. Employee Morale:
    If your employees see a significant number of jobs being outsourced, their morale suffers and rightly so. They think their head may be on the chopping block soon and quite often they are right. It helps if you have clear cut definitions about what will be outsourced and what won’t be and then communicate them effectively to your employees.
  8. Political Backlash:
    During political season, candidates take shots at companies outsourcing jobs overseas and sometimes your company may get flack for it. All politicians know that jobs will always move towards lower total cost but if they can make political gains by ranting against it, they will. Remember, their focus is on getting elected, not on speaking the truth.
  9. Customer Backlash:
    Some customers resent their calls being fielded by people who have strong accents and at times they express themselves in a bigoted and racist manner. That hurts morale at the contractor’s side as nobody likes dealing with racist and bigoted people.
  10. Enforcements:
    When relationships fall apart, the separation can be bitter and expensive especially when dealing with the laws of other countries.

The purpose of this article is not to scare you but to make you aware of the disadvantages of outsourcing. It will help you prepare better.

Good Luck!

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