Five Causes of Outsourcing Failures

5 Causes of Outsourcing Failures

Posted on October 5, 2015

What causes an outsourcing project to fail? Lack of communication, high expectations, negative public opinion, poor quality, and lack of communication are some of the top reasons an outsourced project could fail.

With the growth of a company, comes the increasing need for assistance in a variety of areas such as IT support, customer care, or production. While some enterprises will choose to recruit new employees to handle the increase in the workload, other companies will choose to outsource the extra work to external service providers. Outsourcing is indeed an effective way to meet the increase in labor needs while maintaining low costs.

However, outsourcing can sometimes fail due to several underlying risks.
What are these risks? And how can your enterprise mitigate them? Here is a list of some of the risks that could send an outsourced project into the depths of failure:

  1. High Expectations

    Outsourcing is generally synonymous with increased profitability and reduced costs. In addition, service providers may overstate their competencies and the advantages of opting for their services in order to win a contract. This can make a business overestimate the benefits that come with outsourcing. Having high expectations can make an enterprise outsource work that should best be managed by in-house employees. Instead of keeping your expectations high even before you outsource, you can request a free trial project. This will give you a clear picture of the abilities of the service provider.

  2. Lack of Communication

    If the service provider does not understand what they are supposed to accomplish in the project, the work will not be completed as per your expectations. For instance, if your business outsources the development of a product to a service provider in another location, there may be confusion over what the finished product is supposed to look like. To solve such problems, it is a good idea to maintain strong communication channels through phone, email, or chat. Reviewing the work at regular intervals can help you point out errors and suggest modifications.

  3. Low Quality Work

    Business managers can easily oversee the work of their own in-house employees to ensure that they are performing well at their job. However, when a project is outsourced, your managers will not have direct oversight over the service provider. There is always the risk that the service provider will cut corners during production or provide you with poor quality work. Checking the quality assurance processes of the service provider beforehand will give you a better picture of the quality that you can expect.

  4. Conflicting Interests

    Failed outsourcing initiatives can also arise from a difference between the interests and cultures of the outsourcing and the hiring company. To overcome this, ensure that you choose a service provider from a location that shares your interests and understands your way of working.

  5. Negative Public Opinion

    The public can view your company negatively if you outsource. Outsourcing is associated with the shipping of jobs overseas. Such an image can harm the reputation of your company and even damage your public relations.

What do you think are some of the other causes for an outsourced project to fail? Let us know your thoughts, views, or queries by leaving a comment in the box below. We, at Flatworld Solutions, love to hear from you!

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