Outsourcing in today’s time is the most effective way to cut costs and spare resources (Both Human and Material) to invest in core business areas. Due to these benefits, many companies choose to outsource tech services and solutions including software development services.
While there is a bright light that comes with outsourcing, it does not come without a dark side. This article will discuss the outsourcing challenges that companies face and how to overcome these challenges effectively.
Authority & Control
Who will possess the authority and responsibility to make important decisions and choices about the project to raise tension between a business and an outsourcing firm? Employees of a business tend to behave like they have total control over the project and its parameters and the complete authority to make important decisions. They may not accept and support the change in the project management lifecycle. On the other hand, the outsourcing team can think and act contrary.
The best way to overcome this problem is to declare in the outsourcing agreement to what extent the outsourcing company and business’s employees can exercise control over the project.
Limits should be declared about what sort of decisions a service provider can make regarding the outsourced project. Terms and conditions of the service agreement should be made clear to the employees of both the business consulting outsourcing firm and the outsourcing vendor.
Most of the time business makes a mistake of expecting too much from an outsourcing firm. It may think or act like everything will be handled by the outsourcing service provider, and it has nothing left to take care of. Such overwhelming and false expectations can lead to project failure and disappointment for the business and becomes one of a business damaging outsourcing challenges.
To tackle this challenge, the best possible way is to make things clear in the very beginning about what will be the role and responsibility of the outsourcing service provider throughout the project life and what results should be expected from the outsourcing vendor. It is mandatory to make the company seeking outsourcing services aware of the plausible risks and the potential costs linked with outsourcing.
Companies may have fantasized that selecting an outsourcing service provider and triggering a project development life cycle can be done quickly, according to the plan and expectations. Also, they may underestimate the time required by the outsourcing team to complete the project.
Companies should spend sufficient time in selecting an outsourcing firm. They should select a vendor that they think can fully align with their expectations and meet their requirements.
To make the process professional, a business should take the qualitative and quantitative approach while outsourcing a vendor and get a time estimate for project completion and a transparent timeline of the project lifecycle from the outsourcing service provider before the project begins.
This would eliminate any exaggerated expectations or false hopes on the part of the business regarding the delivery of the project.
Offshore outsourcing can bring diverse talent onboard, but the cultural and communication barrier can bring a wave of problems. When companies assign their projects to offshore vendors or teams, they have to tackle corporate differences and regional differences.
Corporate differences occur because outsourcing involves two different organizations. Regional differences occur because the business and the outsourcing service provider are stationed in different regions, countries, continents, or even time zones.
These corporate and regional cultural differences can cast shadows on different areas of your project management. It can interfere with the communication barrier, time clashes, & misunderstandings and distract the team members resulting in poor performance and decreased productivity.
To overcome this issue, a business that will outsource a project, especially for the first time, should arrange a workshop to train its employees about the corporate and regional cultures, educating them about the demographic variations & their impact on the practices and norms of the outsourcing firm.
On the other hand, a similar workshop related to the awareness about the clients’ organizational and regional differences and norms can be arranged by an outsourcing service provider for its employees.
Linguistic & Communication Barrier
Another challenge that companies face while outsourcing their projects to intercontinental or intracontinental vendors is linguistic differences and communication barriers. People might have their regional dialects that you might not be able to interpret properly. Another challenge that results due to the communication barrier is unsaid suppositions.
Many businesses have experienced this problem while outsourcing. While working and interacting in the same building or office space, employees discuss stuff and picture what others think and state. On the other hand, when the developers are working offshore, there are many ways to order, or a request can be mishandled or communicated wrongly.
The communication barrier can be reduced by using HD cameras, fast internet for proper streaming, and online chat rooms or groups for instant messaging and video conferencing.
For effective collaboration, remote working platforms such as Basecamp can be used. For overcoming linguistic differences, businesses in English-speaking countries can outsource to countries or regions where professionals can easily understand and speak English.
Loss of Sensitive Data or Information
Amid the COVID-19 pandemic, people’s move to work remotely has contributed to a notable rise in cybercrime costs expected to top $1trn for the year 2020.
As Companies are increasingly faced with the dangerous consequences of cybercrime and data breach, outsourcing comes with a potential risk of compromising sensitive data and intellectual properties such as business plans and confidential documents, etc.
Doesn’t matter how large and developed your organization is; if it’s a startup or an enterprise, having complete security of your data and IP is crucial. While working with a remote team of developers, you might be required to share a lot of important data, including your core business details, operational structure, and other high-profile information. Apart from the important details, you might be sharing your database, resources, and other important tools while outsourcing.
Suppose your outsourcing contract lacks explicit statements such as the seriousness of your IP protection and information or resources. In that case, you may be standing on the edge of losing all of your sensitive data.
This problem can be tackle by signing a legal contract like a non-disclosure agreement (NDA) with the outsourcing vendor. The risk of a data breach gets diluted when the outsourcing vendor implements strict security measures.
The outsourcing company should maintain a checklist to ensure if the service provider is implementing technical measures like
- Protocols for Resources & Data access
- Strict control and security check to prohibit unauthorized entry into premises
- Administrative control and regulations over employees’ conduct
As discussed, outsourcing challenges typically involve loss of control, communication barrier, exaggerated expectations, lack of organizational trust, and data breach, challenges making it difficult for businesses to adopt it.
If you and your leadership fail to interact actively with your outsourcing service provider, the vendor becomes a surrogate for your business. But these outsourcing challenges are overcome easily if handled professionally, making outsourcing beneficial for the organization in terms of cost, service levels, and access to talent.