The Most Common Problems of Outsourcing and How to Deal with Them
The number of companies that choose the outsourcing strategy is growing rapidly. In 2019, the global market size of outsourced services reached the point of 92.5 billion dollars, which was twice as much as compared to 2000. There's a bunch of reasons behind outsourcing popularity, especially in the IT-sphere, yet the primary reason is in cost-cutting opportunities. Apart from that, outsourcing makes it possible for companies to focus on core business activities while delegating time-consuming IT-related tasks to the experts who can do it better and faster. As we can see from the Deloitte survey, nearly 80% of companies that have chosen to outsource are happy with the results. Sure thing, everyone wants to be among those satisfied outsource clients.
The positive side of outsourcing is clear, but what about the other 20% of unhappy clients. It is evident that those people have faced certain outsourcing problems.
So, what are the possible outsourcing issues?
There are none. Outsourcing is flawless. Now contact us! :)
Well, as a company that provides IT outsourcing services, we wish we could say so, but... Like it or not, there’s a number of risks associated with outsourcing and you have to be aware of them in order to know how to prevent them.
In this article, we’re going to be talking about the most common problems of outsourcing and ways of their avoidance.
The problem of outsourcing #1: Cultural differences and language barriers
A lot of outsource clients tend to underestimate the importance of understanding cultural differences. People with different cultural backgrounds may have absolutely different points of view on how a certain task needs to be done. There are a lot of things that are directly dependent on culture: attention to detail, focus on end results, and innovation are among them. The National Outsourcing Association has conducted a survey according to which more than 75% of interviewees claimed that they should have taken more account of culture when outsourcing. The same can be said about language. It is crucial to create functional communication channels and English language proficiency is a vital part of that. So, before signing any contracts with a company providing outsourcing services, make sure you and a vendor are on the same page.
The problem of outsourcing #2: Different time zones
Let's say you live in New York and your outsourcing provider is from Kyiv. The time difference between these locations is 7 hours, and you only have 2 to 4 overlap hours. The time zone difference issue has to be taken into account in order to work out the most convenient time for communication. When trying to match working hours, don't forget that there are a great number of available tools from messengers and meeting planners to task management software and time difference calculators.
The problem of outsourcing #3: Costs
When choosing to outsource, the upcoming expenses are the first thing clients pay attention to. It makes sense since the main reason why companies pick the path of outsourcing is an opportunity to save money. However, bad budget planning is among potential issues related to outsourcing that often leads to overpaying. If you really want to reap the cost-cutting benefits of outsourcing, don't do anything rash. You need to conduct a deep analysis of all the pricing peculiarities including all possible additional charges. As well as that, never fall for the bait of the cheapest bargain as you may end up paying even more. Study the market, read reviews, and weigh all pros and cons.
The problem of outsourcing #4: Not knowing your vendor
You have no idea how many companies sign a contract while being in the dark on what to expect from a vendor of outsourcing services. This often happens because of the absence of experience working with outsourcing providers. One beautifully made website isn't enough to make the right decision. It is recommended to check out the reliable review platforms such as Clutch.co, arrange a personal or online meeting with an outsourcing company representative, study a company's most recent cases, etc. All of this will help you to avoid one of the most common problems of outsourcing - unreliable vendors.
The problem of outsourcing #5: Little to no expertise in technology you're building
How can you decide whether or not software developers you hire have enough skills, knowledge, and experience in the technology you want them to build if you know nothing about it? The question is rhetorical, of course. To be able to give clear instructions and control the stages of development reasonably, it is advised that you research information technologies your project requires in advance. You may also like to find a tech-savvy person to help you with this task.
The problem of outsourcing #6: The risk of data leaks
The question of security should be of top priority and it's not only when you bring in a third-party company. Yet, speaking of outsourcing, security measures aren't the place to lag behind. A number of preventive actions, security procedures, and technical safeguards have to be done in order to protect the data your business relies on. It is recommended to have something like a Data Processing Agreement (DPA) signed. In this way, it will be possible to summarise how the data should be stored, processed, and transferred. Also, make sure that security policies are compliant with the GDPR regulations.
The problem of outsourcing #7: Control
Another problem with outsourcing is the inability to take full control over a project. An external company isn't your in-house team. That being said, you need to remember that you can't gain full control over the way certain tasks are performed when delegating work to a third-party. While both sides usually discuss the level of involvement in the workflow at the initial stage of cooperation, it doesn't make much sense to outsource, if you are used to controlling every aspect of a project. The loss of control leads to high reliance on a contractor, which is why it is important to pick a reliable partner.
Conclusion
As you can see there are quite a few current challenges in outsourcing. The list could go on and on, but we have decided to outline the most typical issues. However, despite these and other problems in outsourcing, it remains a perfect solution for many companies around the globe. Not only does outsourcing help save money on developing high-quality products, but it is also beneficial in lots of other ways. The efficiency of this cooperation model is proved by such giants of the technology world as Microsoft and Oracle that have chosen to outsource and won from it.
At Yojji, we have been working within various outsourcing models, therefore we consider ourselves competent enough to claim that all of the issues mentioned in this article can be easily solved with the right approach. If you opt for our services, you can be sure that we will go through each point of this list together in order to find the most suitable and satisfying solutions. In case you have any questions in regard to this topic, feel free to contact our experts.
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