5 Key Steps to Mitigate Outsourcing Risks

Many organizations today realize the benefits that outsourcing provides. be it operationally, logistically or financially. But there definitely can be risks involved if not done the right way. For instance, savings in terms of cost might not be as much as you had initially planned it to be, the third party you hired might not possess the personnel and the skills required to perform a given assignment or project, which intern would then might affect the deliverables. These are just some of the risks that might involve, there definitely can be many more. 

Let’s discuss some of these risks and ways to mitigate them:

1.The Issue of Trust – 

It can happen that the outsourcing company you hire only talks about vast expertise and top-notch talent but the reality turns out to be different or they might go out of business in the middle of your developments. 

Mitigation – 

Go through the company’s website, check the testimonials and case study of the different projects that the company has worked for in the past. Check their social media presence as capable companies share valuable information in the most creative manner on these platforms. Get some feedback directly from past and present clients. Clients that the company has worked with have nothing to lose so they would tell you nothing but the truth. 

2. Lack of Domain Expertise – 

If the vendor has less or no experience of your business niche then they might take longer to analyze your requirements. The absence of domain knowledge can cause numerous issues while your project is getting developed and eventually result in something that is completely different from the standard industry norms. 

Mitigation – 

Learn about the domain expertise of your vendor. This information should be provided on their website, if not then you can directly ask them for the same as well. Prepare a blueprint of your project and assess your staff accordingly, if you notice any red flags during the development process of your project or assignment then you can simply take your blueprint to a more competent developer. 

3. Unforeseen and Uncertain Costs – 

Even though with outsourcing you can save huge on recruitment costs, there can be times when the hidden costs might ruin your cost cutting efforts. For instance, if you outsourced your administrative work in order to lower your cost, but the vendor creates new overheads for changes during the service period, resulting in a skyrocketed cost that you had never imagined. 

Mitigation – 

Keep your requirements clear beforehand. This will also help in defining your scope of work before the provider and will also help you reduce or completely ignore the unexpected cost. One must look out for “transparency of expenses” while choosing an outsourcing model. You can always consult a third party law firm for guidance if you require any advice over the contract. 

4. Loss of Control – 

Outsourcing certainly involves few risks (though easily avoidable), one of which is partially losing some control of your assignment/project. Having and consciously working towards a mutual understanding and trust is something needed while working with remote employees. 

Mitigation –

Choose the aspects of delegation you would like to take to the vendor. You must pen down a detailed management plan in advance with all lists of main stakeholders, their responsibility and their contacts. Hiring remote employees doesn’t give you the privilege to sit back and relax, you must keep an eye on the whole process as it flows. Working together with your employees, be it remote or otherwise is the best way to fetch a maximum amount of results from them. You must set up multiple communication channels for the week and follow them religiously in order to keep things in check and under control. 

5. Lack of Skills with Remote team – 

It’s natural to be a little hesitant at first while opting for remote employees from a certain vendor. In situations like these, vendor expertise plays a crucial role as you surely would be at risk getting your job done by an amateur.

Mitigation –

Choose a vendor wisely and do a thorough research about the same before signing a contract. Be rest assured that the partner you are choosing is well versed with your requirements in terms of remote services. If not then you must have a memo prepared much in advance to be shown to your vendor so that they can go through the same and provide employees accordingly. The vendors must really be aware of the difference in the time zone between the employees and the clients along with the cultural differences. 

The risks discussed above can fortunately be averted if you plan the whole selection and development process thoroughly. Preparations may definitely be tiring at times but the outcome would certainly be close to what you had expected. With the right amount of preparation and planning one can avoid the gravest of developmental risks so that your customer-vendor relationship can be fruitful and your outsourcing experience be beneficial.