Outsourcing Problem
All business decisions and operations involve risks, which is a part
of doing business. Outsourcing is not an exception and that is
something that of course a company needs to be prepare for when
making outsourcing decisions. There will be risks at every stage of
the any process. It is obvious that a company needs to consider the
risks involved in outsourcing its processes. Once the risks have
been identified they should be analyzed and processes should be
created to minimize those risks.
Some main outsourcing problems or risks can be identified in
outsourcing operations.
1. Geographical problems:
Outsourcing can result in many problems that are related to the
geographical location of an offshore destination. Some of these
problems may include language problems, accent problems, political
instability, change in laws and regulations, labor laws, cultural
issues and so on.
2. Infrastructure and operational problems:
Infrastructural and operational problems can be in the form of for
example insufficient communication infrastructure, undeveloped
disaster recovery capacity of the country, power generation
capacity, and non renewable resources availability. Thus before
choosing an offshore location, it is vital for a company to make
sure that all the statistics and factors support outsourcing to that
destination.
3. Project related problems:
The main outsourcing problems nowadays would most probably be
project related concerns. As more and more companies are outsourcing
the geographical, infrastructural and operational risks can be
evaluated in advance regarding that the destination is already known
for its outsourcing market. For example with India and China the
before mentioned risks and problems are known and have already been
experienced by many companies and do not come as such a surprise.
Project related problems on the other hand depend wholly on the
provider, the project to be undertaken, the process of the project
and the relationship with the provider. These aspects include
several risk related issues such as expertise and manpower of
provider, reliability and ability to execute the required tasks as
agreed and for example whether the provider can fulfill the
outsourcing company’s expectations.
In order to avoid the basic outsourcing problems a company
should take preventive actions before hand, maintain close contact
and control of the outsourced operation and its provider as well as
keep up-to-date with all issues concerning the outsourced operation.
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