12 Factors to Ensure Your Outsourcing Fails

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business outsourcing fails

Its becoming increasingly popular for many companies to turn to outsourced talents and skills in order to slash their expenses as well as get the best results. This is most especially seen when it comes to software development. However this doesn’t mean there won’t be any flawed partnerships or mistakes made between a company and its nearshore / offshore hire.

Below are some of the most common mistakes that will most definitely lead your outsourcing initiative to failure:

1. Playing the blame game

When you assume that the nearshore / offshore company isn’t delivering as it should be, it can be tempting to continuously blame them for over-promising, and once this becomes a routine issue, then its ends up being an elephant of a problem. Oftentimes the nearshore / offshore company may feel that either you under-estimate their capabilities or you have doubts about the established contract or even worry that they won’t get paid for their work. This leads to a ‘us versus them’ thinking, which result in the entire project being delayed for months, and in a worst case scenario, it eventually collapses.

2. Focus on pay rates rather than results

Another rising issue is when an the outsourcing customer is chiefly concerned with attaining the lowest pay rates than the overall end result. Rather than focusing on the fees when getting the right nearshore / offshore firm, companies should consider the size of staff they need involved in the project as well as the incoming staff’s expertise and experience. For instance, you have more chances of succeeding if you decide to hire a small team of experienced developers at a higher rate instead of going for a large team at a cheaper rate yet they lack in experience or skills. Setting cost reduction as the main objective of your outsourcing, may lead to you settling for the cheapest service providers available thus forgoing the quality of work.

3. Micromanaging

Its counterproductive to be a control freak or overbearing with your outsourced staff. Aside from putting the hired company under pressure, these constant interventions hinder the progress and the general flow of the project operations, also wasting a lot of time as well. If you have decided that your company will outsource to an offshore client, then be confident that the client’s employees will be efficient enough to perform the job at hand, as well as take initiative where necessary. Avoid micromanaging to ensure performance. Micromanaging can also create unwanted conflict which guarantees unsuccessful outsourced work relationship.

4. Fail to make your goals and targets known

If your outsourced employees have too much leeway then expect issues and disappointments to pop up. Without laying out clear guidelines and targets, don’t assume that they will automatically know what the exact business goals and targets you are looking to achieve are. Conveying 100% of your company’s desired outcome is almost impossible, but assuming that the nearshore / offshore provider will do all of the thinking for you will only lead to failure.

5. No concurrent change in workplace culture

Choosing to outsource should be serve as a way to help your business as a team of people sharing the goal and making efforts to achieve it, rather than help your business as an intangible idea. The dynamics of your team shouldn’t be lost or threatened. Outsourcing should incite feelings appreciation in order to establish a workplace that is both balanced and quality-oriented, rather than make your in-house team anxious, even become hostile because of fear of losing their jobs.

6. No shared vision

For the success of any buyer and vendor relationship, it is vital that a shared vision exist between the two. In order to avoid unnecessary misgivings, ensuring that both parties know what is expected from each of them is essential. Put in place benchmarks and set measurement metrics that both of you agree upon. Be open about how each of you works, while taking advantage of the strengths of both teams to make achieving these clear set expectations much easier.

7. Lack of communication

Lots of outsourcing relationships fail due to problems that stem from lack of communication. Without the expression of each of the parties’ thoughts, there won’t be an understanding set up between them. A healthy working relationship doesn’t revolve around the approval and reviewing of work. Time and effort should also be invested in understanding everything from what is said to what wasn’t said, because even the smallest detail can ruin the whole project.

8. Lack of a proper transition process

Forking out the tasks and processes to an outsourced client is not only time consuming but can also be extremely tedious, but once its done, it will be worth all the effort. Making sure that the transition is smoothly done will give your business an advantage, as it helps it avoid rises in costs as well as any unnecessary delays during implementation which would ultimately affect your customer satisfaction.

9. Inadequate risk analysis

Risk analysis is yet another factor that most companies overlook. Most of the times that a company decides to carry out a provider risk analysis, not enough qualification or detail is set. This in turn leads to undelivered expectations and situations that are less than appealing in the future. Ensuring that you have a specific criteria to be met along with consistent evaluations, prevents you from sacrificing efficiency or quality.

10. Rising or unforeseen costs

The cost of outsourcing from an offshore client can be significantly affected by location and inflation, so it is recommended that a company consider all the possible factors before delving into working contract. This will help prevent them from encountering unnecessary or unforeseen hefty cost increases. As a way to effectively reduce the chances of outsourcing failure arising from unforeseen cost increases, try to dividing the tasks at hand among a variety service providers. After rigorous analyzing and consideration, select different locations for better management of unpredictable local costs.

11. Lack of flexibility

Though flexibility is ideal in an an outsourced developer, this is not always the case, therefore making your provider feel more lack a partner, a part of the impact and development is necessary. This way, whenever there is a need to make unexpected changes, they are able to prepare accordingly.

12. Buyer and provider relationship

It can not be emphasized enough, to ensure that your outsourcing is free of failure, the company’s and outsourced firm’s relationship needs to be the first priority. As partners, a vision that is clearly defined should be shared between you, not just for the basic task but also for the long-term goals.