You have probably wondered: what are the challenges with outsourcing? or, does outsourcing work? Have you thought about hiring this service? Today, outsourcing is chosen by companies wanting to keep up with the latest technologies and grow more rapidly. Modern companies have learned to operate remotely due to the recent pandemic, growing together with their outsourcing partner. Yet, many still ask: what are the issues or disadvantages of outsourcing? In this blog, we’ll try to shed some light on the pros and cons of outsourcing.
1. Lack of outsourcing experience
If you have never worked with an outsourced team you may have to learn how to adapt your company to one, you may need to acquaint yourself with it, what to expect and what to look out for.
If you lack outsourcing experience, finding an experienced vendor partner is a solution that will help you identify potential bottlenecks and alleviate potential risks. These providers will help you define the entire process and help you to adjust your expectations and define the project requirements.
2. Poor niche expertise
Sometimes it is difficult to find a specific profile for the position you are looking for, since there may be a shortage of that specific expertise.
Outsourcing companies -such as Backoffice Abroad- will engage in an exhaustive search to find the perfect fit for the position you need to fill, fast and at a low cost.
3. Lack of costs planning
Service efficiency and budget savings are some of the main reasons for embarking on an outsourcing project. There is always a risk of paying more than anticipated.
You can consult a provider, a sole proprietor, or even a freelancer to go through your project in order to define its requirements. Estimates from multiple vendors will help you spot inconsistencies or any misunderstandings in the project demands. In a discussion with a vendor, clearly state your budget limits and discuss the details of a pricing model to be made clear to both parties
4. Choosing the right BPO company
Strong track history is not the only factor you need to pay attention to. The size of a provider can be the key.. A small outsourcing provider might not offer you scalability, while an enterprise-level company may be expensive and lack a personal focus.
Try to decide early on how you see your project and what you need to avoid switching vendors during the development process.
5. Lack of cultural context
Cultural differences can lead to misunderstandings or even conflicts between team members. Not only the culture of the country but also the corporate culture must be taken into account.
Look for suppliers that provide workers who share a similar culture to yours, in an agreeable time zone and that communicate clearly and effectively, just as we do at Backoffice Abroad.
6. Legal formalities
Data protection, confidentiality, liability, regulatory compliance and intellectual property protection are important issues with any offshore outsourcing project. In addition, when outsourcing, legal processes can vary drastically from country to country.
To deal with these different scenarios is best you research and consult legal experts. You need to document everything related to payment terms, reporting, confidentiality, security, data, and transfer of intellectual rights.
Consider clauses such as compensation and payment terms, service provider warranties, reporting, delivery and acceptance, support services, provider responsibilities, ownership, and intellectual property rights, and confidentiality.
7. Poor and/or lack of knowledge transfer
The problem can be split between the customer’s and the supplier’s perspectives. The customer may face this challenge when the project is completed and no longer has the support of the vendor. A vendor may take over an unfinished project from previous developers and fail to meet the requirements set, due to the absence of a proper knowledge transfer procedure.
To prevent knowledge transfer problems the solution is always to keep all project documentation under control.
8. Lack of team management or leadership
Communication is key. You may think your needs are understood, but people come from diverse environments and backgrounds and will have their unique insights.
Be sure to make communication an important part of the workflow: integrate calls, feedback loops, and other communication techniques into the project schedule. You can also integrate software such as Click Up or Trello to keep track of projects.
9. Finding the right candidate(s)
Take advantage of quick hiring and smart onboarding, make sure your vendor has a good record as an employer themselves. Get employee reviews and read internal company policies to make absolutely sure that your vendor is a good and trustworthy employer.
10. Selecting the right approach
There are three approaches that have different effects depending on your requirements, scale, schedule and budget. You should discuss these with your vendor:
a. The dedicated development team model.
With this model, you will be able to add additional dedicated specialists to your present team to fill a skills gap or increase performance.
b. The fixed-price model
The requirements, scope, timeline, and budget are fixed from the beginning. Any additions will cost you extra.
c. The time and material model
It is intended for long-term partnerships where changes can be made on the go. You can change the direction of the development process at any given time.
FAQs
Here are the answers to the most popular questions about outsourcing:
1. What are the advantages of outsourcing?
A. Lower Costs
Companies often outsource their projects to other countries to reduce production costs.
B. Increased efficiency
Most outsourcing companies are niche-based, which makes them experts in their own fields. Because they serve multiple clients and are more experienced and efficient than your in-house team.
To learn more about the benefits of outsourcing, read this article.
2. Services most frequently Outsourced
Here are some popularly outsourced processes:
A. Software Development
IT outsourcing is the most common in recent years. In addition to being in highest demand, it is the best paid.
Click here to learn about all the types of IT outsourcing we offer.
B. Web Design and Graphic Design
Getting a designer that meets your exact requirements might be best handled by the HR team. Most companies prefer to hire an outsourcing firm to find the ideal designer for their company.
Click here to learn about all the types of outsourcing we offer at Design and Creatives.
C. Human Resources
HR outsourcing gives companies access to trained employees, powerful automation, and superior technology at low prices. These agencies have more experience and better HR processes to meet the demands of your in-house team.
Click here to learn about all the types of HR outsourcing we offer.
D. Marketing Services
Maintaining a marketing department is often costly, especially for start-ups or small businesses. These companies outsource their marketing team to experienced agencies that can deliver results efficiently and at a fraction of the cost.
Click here to learn about all the types of marketing outsourcing we offer.
