Outsourcing is a useful tool for businesses looking to expand their reach. With it, they can increase their team faster and better position themselves. But it is far from a perfect solution. One wrong move here and your company can be in a bad situation. And so, here are some of the outsourcing pitfalls that you should be aware of and how you can avoid them.
Outsourcing pitfalls no. 1: No clear strategy
Many companies going into outsourcing for the first time assume that it is a “hire and forget” kind of deal. They expect that once they have signed up with the outsourcing firm, the latter would be able to do the job on their own without input from them. This lack of planning can cause the effort to be less effective than it should be.
Another common issue here is that companies can have an “us too” complex. When they see that outsourcing has worked for rivals, they expect it to go the same way for them as well. This assumption disregards the fact that every company’s situation is different and that they will need a specific approach suited to their needs.
Overcoming the pitfall
To create the right outsourcing strategy, you need to have a good understanding of your company’s needs first. List down all the areas you want to outsource and the extent of your operations. This will give you a baseline to build your outsourcing strategy around.
Another factor that you need to consider in building your strategy is what value outsourcing adds to your business. Look into things like how it can integrate different functions into your operations. It would also be a good idea to explore how outsourcing can help you build new tools and processes for your business. This step will help you project potential long-term work with your service provider and adapt your strategy for it.
Outsourcing pitfalls no. 2: Not having the right provider
With so many outsourcing companies out there, it can be hard to decide which one to sign up for. Often, companies will go with the one that offers the lowest prices. But, as they would often find out, this might not be the best way to go. The outsourcing provider that they signed up with might not be compatible with their work.
Another situation here is an outsourcing company that is unable to deliver its promised results. This is often due to the outsourcing firm not having the capabilities to deliver the desired results. As is with the above situation, this can lead to higher costs with an unimpressive return.
Avoiding the pitfall
Closely scrutinizing the various providers will help you narrow down your options. For that, you should always ask key questions like the following.
- Is the outsourcing firm aligned to your strategic goals?
- Does the outsourcing company understand your business?
- Can the company innovate solutions for long-term issues?
To answer these questions, you would want to go beyond the portfolio the outsourcing company presents. Interview the clients that are listed on these portfolios to get a better feel for their actual performance. Be sure to ask for the specific issues that the clients have encountered and how the outsourcing company resolved this. You can use this as a reference for dealing with similar issues.
Outsourcing pitfalls no. 3: Not addressing the organizational response
One thing you should keep in mind when outsourcing is that it will bring in a lot of changes to the company. However, not everyone might be ready to embrace those changes. And not recognizing this resistance and addressing them can be a major outsourcing pitfall on your part.
The resistance to these changes often comes from the uncertainty that stakeholders have about the whole effort. In particular, many regular employees are worried about how it would affect their jobs. Managers also become worried about the loss of control over the tasks that they are accountable for.
Avoiding the pitfall
Constant communication with stakeholders is the key to avoiding this outsourcing pitfall. Before embarking on the outsourcing project, talk with every group in the company. Ask for their opinions on the plan. Be sure to take their suggestions into account when finalizing your outsourcing plans. Once you get the outsourcing operations going, you would also want to get as much feedback as you can from the same stakeholders.
On the other hand, you need to constantly inform your team about the different developments in the outsourcing efforts. Talk them through how these changes will affect their work. You would also want to provide them support in case of significant impact to their jobs.
Outsourcing pitfalls no. 4: No system continuity
Another common outsourcing pitfall is expecting that the external team can settle in quickly. As such, there is no effort to integrate them properly. This oversight results in a less than an optimal working relationship between them and your regular staff.
Because of this, around 22 percent of companies end up canceling their outsourcing contracts prematurely. That creates plenty of unwanted costs due to incomplete work. It can also lead to delays.
Avoiding the pitfall
The best way to avoid this situation is to ensure that the right people get to work with the outsourced team. Your regular staff should already be knowledgeable about the work at hand so that they can act as a guide. Also, make sure that both teams are using compatible systems to lessen disruptions.
Regular auditing also helps ensure continuity. Use this to keep track of the performances of your regular and outsourced staff. From there, you can identify areas where they might not be jiving correctly and determine how to resolve these.
Avoid these pitfalls and get the most out of outsourcing
These outsourcing pitfalls might seem insurmountable at first. But once you know how to deal with them, you can safeguard yourself from the issues that they bring. Follow our tips and reap the benefits of outsourcing for your business.