Top 5 Outsourcing Risks & How to Avoid Them

Outsourcing is often used as an effective business strategy to reduce cost, bring in innovation and get access to better software products. However, there are risks that can sidetrack your project. What are the most common risks that a business can face in outsourcing and how can you effectively manage them? How do you ensure that your outsourced project is successful amongst these risks? Let’s examine the top five outsourcing risks and find out how to combat them.

Outsourcing Risk #1: Loss of control/ visibility over the project

Losing control over the outsourced project is one of the biggest fears that haunt CIOs. Lack of communication or slow responses may result in a costly product. The key to facing this risk is to understand that your outsourcing project should be equally managed by your company and the vendor. Start by improving the communication with your outsourcing team and also ensure that your in-house team understands how to handle the outsourced project.

Outsourcing Risk #2: Hidden costs

Though outsourcing is cost-effective, it is not an end-all to your problems. If you are to see success in your outsourcing relationship, you will still need to incur cost, like the salary of the project manager or the cost of transitioning. The ideal way to combat this risk is to keep yourself aware about the potential hidden costs in your new outsourcing venture. This will give you a clear view about the exact cost reduction that outsourcing can bring to your business.

Outsourcing Risk #3: Language problems

As you might already know, communication is a crucial factor in outsourcing. Communication can falter if your development team is unable to speak your language (For example: English). To avoid this risk, carefully choose the outsourcing country and vendor. Choose a service provider who can guarantee that their remote team will be able to communicate to you in the preferred language.

Outsourcing Risk #: Quality control

You want the end result of your product to be on par with international quality standards. At times, you may receive a working software product, only to find out its bugs the very next day, after the service provider is no longer responsible. Avert this outsourcing risk, by checking if the vendor is adhering to the latest quality standards. Also hire a certified quality assurance professional on your team, to assess the quality of the product.

Outsourcing Risk #5: Data security

Selecting a certified and reliable service provider is a crucial factor in avoiding the risk of data security, especially if your project involves highly sensitive information. Have a look at the case studies of the vendor and find out if they have handled sensitive information in the past. Check out their security measures and ask them how they have dealt with security problems in the past.

What have been some of the outsourcing risks that you have combated while outsourcing? Is there anything that you can add to the above list? Leave your comments in the box below. We, at Outsource2india love to hear from you!

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