(How to Deal) When Outsourcing Goes Wrong

Outsourcing is expanding your capabilities, but what happens when outsourcing goes wrong? Here are the outsourcing perils and how to deal with them.

Many believe in the power of outsourcing. The promises of productivity, flexibility, scalability and profitability are not just for kicks but would-be occurrences if you know how to weave outsourcing powers in the right way.

For some, however, outsourcing can be a nightmare. How can outsourcing be negative?

Perhaps one of the most common mistakes when delegating tasks is partnering with the wrong outsourcing firm.

You’re basically entrusting your company’s business functions and operations to another. This means if you get together with an ill-suited partner, the consequences will be detrimental—just like a bad marriage gone wrong, you’ll be on the bad side of the receiving end.

Let’s explore when outsourcing goes wrong and what are the most common reasons why outsourcing fails. Then, afterward, we’ll help you find solutions to these outsourcing glitches.

Let’s go!

When Outsourcing Is Not a Good Idea?

No matter how great outsourcing is, there are certain conditions when it’s definitely not the best idea.

That said, whenever one of these occurrences transpires, it’s probably for the best to keep the work within the company rather than push for an outsourcing situation to work out.

  • Too Costly

    Why do you want to outsource again? Oh, to cut the cost and save resources for something more important.

    Saving money is already in the bag when outsourcing. With a remote setting, you don’t have to worry about rent, utilities, equipment or compensation benefits. You’re working with contractual workers, who can work right away without needing to train.

    Surprisingly, despite the many cost-reduction opportunities, there are situations when outsourcing can be expensive. This happens when the cost of hiring an expert exceeds your budget.

    If the process of bringing in a highly qualified individual is too costly, perhaps, you should rethink whether to outsource or not.

  • Loss of Control

    When you’re outsourcing, you’re shifting the responsibility to another. This means someone else will manage the project and progress on your behalf.

    Even though you’re relying on an external company and individual, it’s still necessary to maintain a bit of control of these outsourced projects, since ultimately, you’re responsible for the completion of the task.

    So, whenever a third-party provider denies you from having certain control and makes decisions without your knowledge, outsourcing can turn sour. After all, as the company that has a major interest in the outsourced project, you should be “in the know.”

  • Work Can’t Be Split

    Outsourcing is supposed to lighten the workload, not pile up more workload.

    So, whenever you think about outsourcing to help your team complete a task, ponder on whether or not the project can still be outsourced.

    If your team is already working on this project at this time, can you still split the workload into segments or modules? If the answer is no, please, avoid outsourcing.

  • Stipulations Does Not Allow It

    Sometimes the only reason why outsourcing is never a good idea is because the contract does not allow it.

    You see, contract requirements may have a stipulation that has a “no outsourcing” clause. This is one of the rights of the client that you should adhere to.

    Violating the contract is never a good idea. You could be penalized for it, and it can stain your company’s brand and image. In the future, your clients will refuse to work with you anymore.

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What Are the Problems with Outsourcing? And What to Do About Them…

Now that you know when outsourcing isn’t the best idea, let’s talk about the real problems with relying on another company or people to do your in-house work.

Sure, outsourcing has glitches, as all things are.

But the most important thing is, how do you tackle these issues?

  • Lack of Experience and Expertise

    When you start working with someone outside the company, it can be challenging. How do you convey your vision to someone you have never worked before? You’re not really familiar with their practices, concepts or workflow.

    Also, there’s an issue of competence, you’re outsourcing because you don’t have the skills to complete the task. Since you lack the knowledge and understanding, how do you even evaluate the work of your third-party provider adequately?

    These concerns cannot be undermined because this puts you at risk of mis-hiring someone.

    Solution

    Choose an experienced and reputable third-party provider. They will walk you through the process, help you define requirements and find you the best people for the job.

    Also, it’s important to set clear performance standards for the project. For this, you might want to appoint someone inside the company to define these standards and monitor your external provider.

    If you can’t afford another in-house hire, you can always turn to a trustworthy third-party vendor to help you understand all of these.

    Remember, there will always be risks, but rest assured, the right provider will be there to support you every step of the way.

  • Poor Communication

    Communicating is easy when you’re talking to someone on the same wavelength.

    However, outsourcing is bringing in people from all over the world with diverse backgrounds, experiences, languages and perceptions. In this sort of working environment, effective communication is not so easy after all.

    Without smoothing the rough edges of communication, it’s harder to keep a smooth workflow and be on the same page.

    Solution

    Make sure to prioritize communication in all aspects of your workflow and integrate it into your schedule. If possible, make time to have in-person meetings. This will create a bond or camaraderie, needed to facilitate better understanding.

    Also, don’t forget to leverage project management tools to always be updated and in sync with each other.

  • Ambiguous Cost Plan

    We’re not backtracking; outsourcing will keep you within the budget. However, the budget might go south, if you don’t plan thoroughly enough.

    And if think it’s easier to calculate cost estimations, think again. It’s hard to plan the cost without accurate requirements, timelines or resources.

    Solution

    To overcome this outsourcing challenge, determine the exact requirements of your project. For this task, you can hire an experienced remote worker to make a cost estimate and monitor your financial standing.

    Ask as many questions regarding wages and costs to avoid financial surprises. Convey your budget limitations. In this way, you can choose the right price model and pick an outsourcing company that can work with you regardless of your limits.

  • Cultural Differences

    Outsourcing pretty much entails collaborating with people in a foreign land. As such, cultural differences are unavoidable. Though diversity brings something new to the table, it may result in communication struggles that might eventually affect decision-making and service quality.

    Solution

    You can hold training in language and overcoming diversity so that everyone can understand each other better. This will promote inclusivity while fostering a sense of loyalty towards the company.

  • Poor Knowledge Transfer

    Two problems result from poor knowledge transfer: one, an outsourced project may be unclear if your third-party provider doesn’t properly document the project. If you choose to terminate the contract with said vendor and find a new one, you will affect the project.

    Second, if you don’t provide a precise project framework, it will be difficult for your outsourcing vendor to meet expectations. Vice versa, without documentation on your end, it will be easier for them to fail the requirements.

    Solution

    Ensure that you have vivid and extensive documentation. Your external provider should have a full grasp of the project by going through your documents. You can also organize a meeting to discuss and answer all the questions of your vendor.

  • Security Lapses

    Outsourcing requires data visibility—sharing critical information, such as client databases and business policies to third-party agencies. This can be a security matter that might compromise your competitive advantage when vital information are leaked.

    Solution

    Ensure security by preparing a non-disclosure agreement and other documents covering security issues. Your contract has to have all the relevant things on data storing, transferring and processing.

The Importance of Finding the Right Outsourcing Partner

Yes, there’s a downside when outsourcing. But don’t worry, they can be resolved. In fact, you could’ve avoided them altogether if you had partnered with the right outsourcing firm.

An unsuitable outsourcing provider can compromise quality, breach security, dissatisfy customers and hurt your brand.

If you are new to outsourcing, it’s crucial that you approach delegating with due diligence. Find an outsourcing agency that you can trust, like VAV Asia, with a devoted team and a proven track record.

The right outsourcing partner can take your business to the next level, they can help you solve all outsourcing issues and guide your company to a smooth transition.

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