The Most Common Mistakes in Outsourcing

The following is a list of the most common mistakes that organizations make when outsourcing. If you are a global organization that is interested in outsourcing, ensure that you avoid these six common mistakes, so that you can reap the full potential of outsourcing.

Don’t overestimate overall cost savings

Most companies outsource because of the tremendous cost-benefits that outsourcing offers. Sending your work overseas can help you save significantly on operating costs while getting access to quality services. However outsourcing experts have predicted that the cost of operation even in countries like India will rise by 10% a year. This cost will not reduce but will only rise. Experts have even predicted that down the years India will not be a cost-effective destination. So, if you are outsourcing because of costs, you need to think again.

Don’t underestimate the cost and complexity of managing an outsourcing relationship

Before getting started with outsourcing, ensure that you are aware about how the outsourcing relationship works. Many companies start outsourcing without properly analyzing the time, money, effort and resources that will be involved in the outsourcing process. Although there is cost savings involved in outsourcing, you must also consider the complexity involved in the process. To make outsourcing work, you need a dedicated team of professionals, efficient management, good communication and strict adherence to the service-level agreements signed at the beginning of the contract.

Don’t select a country before understanding your objectives

It is of uttermost important to first understand your business objectives, business processes, operating costs before outsourcing. Based on these, you can select your outsourcing partner. It would also be wiser to study the level of expertise of your partner, the communication barriers that you might have to face, tax laws, infrastructure and proximity before choosing the country. When you make your choice based on these objectives, you will be able to choose the right country.

Don’t select a single-source provider

If you are outsourcing, ensure that don’t outsource all your services to a single outsourcing provider. If that is the case, your business might come to a standstill if for some reason your outsourcing partner is not able to continue to provide services. An ideal way to deal with this would be outsource your business process to different providers in different parts of the world. This would greatly reduce the risk of outsourcing, as your work will not come to a standstill and can continue on a ongoing basis.

Don’t forget to develop a communication program for your employees

Don’t make your employees feel bitter, angry and demoralized that there jobs are sent overseas because of cheap labor. Let your employees know about your outsourcing plans. Don’t send away all your employees as you will still need resources at your end who will manage the outsourcing process and ensure that the outsourcing partner understands the work. Develop an efficient communication program where your employees are told about how your company plans to deal with the outsourcing phenomenon.

Don’t forget to develop retention plans for talented employees

With the increase in outsourcing, there has been more and more competition for talent. Work with your outsourcing partners and devise retention plans to ensure that talented professionals remain within the organization. Develop international development centers and make other provisions so that you do not lose your best assets.

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