Outsourcing has empowered the 21st century global economy, being a strategic tool that’s aimed at achieving more than just cost savings. But due to some instances of outsourcing failure, many business owners are still struggling to adopt this crucial business tactic to excel in their trade globally. The most prominent causes of outsourcing going wrong are choosing a flawed business model, and/or working with amateurish vendors or unskilled outsourcing teams. These outsourcing issues can easily be foreseen and avoided, but it is not always easy for clients seeking outsourcing services to sense the storm on the horizon. Today, let’s try to understand why outsourcing fails.
Mindset of Most Clients while Offshoring
Seeing offshoring as a second-rate business process (that doesn’t require much attention) is the mindset most clients start off on a wrong foot with. Clients with successful offshoring experiences maintain that having an indifferent attitude towards your remote employees can prove to be one of the top outsourcing failures. This implies that thinking that the work is happening ‘there’ and not getting adequately involved with your virtual employees increase your project’s chances of failure. Here’s why a client’s mindset changes when they decide to go for offshoring:
- The Pain of Losing Control
There are many business owners who try to fill in their organization’s job requirement locally, but when they fail to find the right match for a long time, outsourcing emerges as a sound potential solution. The thought that offshoring involves losing control to a third-party vendor can be unpleasant and painful. Hence, clients prefer to shift their focus towards in-house/core processes as part of the human coping mechanism. This preconceived notion (that since you cannot see your resources in person, you have no direct control over their work and hence outsourcing isn’t worth it) is one of the bitterest issues of outsourcing. Only when you start working with a reputed outsourcing service provider, you discover that the process is much more convenient and easier than the in-house working model. - Cost-Effective is Always Low-Quality
This is probably the biggest reason behind most outsourcing failures. Many clients turn to offshoring, simply with an eye on cost-cutting. This labelling sets offshoring apart from all other expensive activities, which are wrongly perceived as ‘growth-driving’ or ‘value-adding’ business activities. It also makes the clients become more obsessed with choosing the cheapest possible outsourcing service provider. Hence, they lose sight of the ideal vision to comprehensively assess the capabilities of their prospective outsourcing partner. A lot of outsourcing quality problems can arise down the road if this misconception (that offshoring is just a cost-saving engine, and not a growth-generating one) isn’t changed.
Hiring Locally versus Outsourcing – Why Have a Different Approach?
Many clients approach outsourcing with a cost-cutting mindset rather than a quality-focused mindset, even for mission-critical projects. As already discussed, this can be one of the most common reasons why outsourcing fails. Let’s understand why an employer thinks differently while hiring locally and outsourcing with the help of an example.
Suppose you own a software development company. It is obvious that your mission-critical projects (ventures that are directly related to your company’s growth) will be connected to the domain of software development. Even then, there are other important and non-mission business functions like bookkeeping, for which you have to hire. Now if you decide to hire a bookkeeper locally, you will never proceed impetuously, even though the requirement is not mission-critical. In fact, you will look for an able bookkeeper meticulously. Then why does this approach change when you decide to look for a remote bookkeeper?
How to Curb these Outsourcing Failures?
Outsourcing experts refer to this discrepancy in the mindset as illogical. It can prove to be one of the biggest problems of outsourcing, as it makes clients lose the will to invest time. According to the experts, cost competitiveness can certainly be a factor to consider, but it shouldn’t be the only one. Aspects like your remote employee’s skill set and stability should also be considered before deciding. Screening your prospective remote staff or offshore vendors by thoroughly interacting with them can be a lifesaver.
If you want to reap the benefits of outsourcing, it’s best to start off by shortlisting the most promising outsourcing service providers to work with. Perceiving it as a business activity that adds value to your organization can significantly improve the hit and miss ratio of outsourcing.
Summing Up
Here’s hoping that this article was helpful in addressing your queries related to outsourcing problems and solutions. Offshoring is an important business activity, but clients are often seen blaming their chosen outsourcing company, labelling them unprofessional. Consider carefully, and you will be able to tell which companies are rogue, and which are professional. Research about your prospective outsourcing partners comprehensively and trust your instinct while assessing them on the basic parameters. If you partner with a reputed outsourcing service company and still end up having a bad experience, they will certainly work out a solution for you to minimise your loss.
The mindset that only the not-so-important tasks in your business are outsourced is the biggest, yet most avoidable outsourcing problem. Inability to decide which tasks to offshore will surely ruin your chances of success.
On the contrary, if virtual employees are treated with the same degree of attention as regular, in-house professionals and are managed diligently, your chances of success in your outsourcing venture will go up dramatically. Change in mindset is very important to witness a change in results. Therefore, it’s best to think of your remote team as just an extended in-house team that doesn’t operate from New York, but New Delhi.
