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Demerits of Outsourcing

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Demerits of Outsourcing

Outsourcing is a good start for your business to help grow. Plus, some of the processes are temporary and the organization doesn’t need to spend on those to hire in-house professionals to perform the tasks. Apart from the huge advantages, there’s been some cons too. You should know the disadvantages-

  • There’s a huge risk in exposing your confidentiality if you’re transmitting payroll, medical records or any other confidential information to the outsourcing company.
  • Hidden costs are a big problem. You should be wise while signing the contract with a third outsourcing party as the clauses may not provide many details of the service they will be providing you. So make sure there’s everything you need before making a contract as they can constitute additional charges to you.
  • When you start a company, it takes an awful lot of things and partners to help you to make it into an organization. If you outsource to another time zone, particularly in the different country, your business could effectively be operated 24*7. While you sleep, your business will be taken care of, as your partner is looking after certain things during those hoursin another part of the world. A downside of this thing could have communication problems or conflicts. So, choose wisely on who you can trust so that you won’t be the one in the future with the bags.
  • A third outsourcing party doesn’t just take your holds but it gives the services to the multiple businesses at the same time, which causes lack of focus on a customer. This can affect your business and its future growth.

But, remember the merits can out-shadow the demerits. It’s just that you should be aware and do the things wisely to get the season in your favor.

When not to Outsource?

Here is a small list of situations when outsourcing would be inappropriate at sometimes.

  • The perfect time to initiate the outsourcing is when the incumbent (refers to a leader in the industry) management is present to ensure the complete and satisfactory implementation. Every board of the director’s member and every senior officer has a responsibility to manage the company assets. The contracts that allow a customer to terminate for convenience may cost the company, and not only in payment of terminating charges but also in distraction arising from the changing to a new vendor or in-house sourcing strategy. So, it’s important to initiate the process in the presence of seniors.
  • In a recession or you can say in a weak economy, organizations may restructure the whole internal operations to reduce cost, eliminate order, rearrange team, deprive unprofitable operations, transfer to a new location, and many other outsourcing orientations. Where such restructurings are in practice without any outsourcing orientation, the stability needed to organize and analyze, as the restructuring means lacking in the outsourcing.

Things to consider when selecting an outsourcing destination

First things first, you must set your mission statement as without one you can’t reach your mindset success line and long-term goals. This dire planning step will make sure you stay focused on what you hope to get off an outsourcing emerging.

Now that you have a plan, you need to sell the idea internally for which you need to hire the well-trained on-board executive team from the day one. If not so, your whole project will be doomed. Prepare to answer the difficult questions on how your plan is going to profit the business and then address them to the employees as well.

Now, you head to make your first phone calls, but don’t think these calls as sales, but treat them as the interview calls. Just understand the other person’s skills and motives such as if they know about your industry? Do they have clients? Are they understanding your project mission? Are they ready to work with you to achieve the success criteria for your company? And so on…

Be ready to go instinctively. Cultural differences are obvious if you start from another country, the national holidays, standard working hours, etc. varies from country to country. So don’t go for an outsourcing to that part of the place where the holidays and your busiest time could clash. Language is almost another barrier. You need to train your team the language of that particular place where you’re outsourcing your business to.

If you have chosen the right partner, then the ratio of getting the references are pretty good. First, you should seek those companies who have already worked for years with your prospective outsourcing vendor. Ask them about their success and failures. Do your own research too, and it will help your business and social network stronger.

Last but not least, review your contract one last time, very precisely and be sure to revisit your project charter. Talk to them if you want some changes to make regarding your goals.