Six Mistakes to Avoid When Outsourcing

Six Pitfalls Not to Fall in When Outsourcing

Overzealous business leaders tend to go full throttle towards outsourcing to cut costs, and commit mistakes that make it not-so-effective for them. Here are six common mistakes businesses make when outsourcing projects, or various business processes:

Skipping Due Diligence

You don’t even hire someone at the lowest level in office hierarchy without due diligence, so why should you sign an agreement with an outsourcer without doing that. Get to know them before you go ahead with inking the collaboration. Make reference calls, ask them how they will go about handling your work, and you will get an idea whether they fit in with your link of thought.

Overestimate Cost Savings

Outsourcing does help you save a lot of money and other resources; however, you will be overestimating if you think the savings will be running into 50-60%. Think moderate and if you are able to hold on 30-35% of the allocated fund, you have your reasons to be happy. Though the salary difference is larger between outsourcer’s employers and human resource in your own country, there are other issues such as ensuring compliance with standards, handing communication, measuring performance and providing feedback, tackling unusual situation, and other such issues, which would consume a part of the funds. Factoring these issues in your outsourcing strategy will help.

Chinks in Communication

Efficiency in outsourcing depends on streamlined and continuous communication. Before you outsource, you need to take out time for creating comprehensive guidelines, procedures and rules. Take it as a rule of thumb: you will need to provide approximate double the amount of documentation you have created for in-house process. Many businesses have guidelines and practices unwritten. If that is the case in your company, you better begin giving these a formal look. Whatever you assume must be in written form. It will bring down unnecessary confusion at various levels and help in quality evaluation as well.

Going too Quickly

If you haven’t outsourced before, keeping the pace slow will help. It takes time to get accustomed to outsourcing and developing a comfort level. Handing over a complex process in one go may be financially better for you, but it may create some unexpected problems. Executives working with the service provider, no matter how experienced they are, will require some time to develop a hang of the thing. Think of the early stages as a honeymoon period and come up with a long-term strategy to augment the positive outcome of outsourcing.

Lack of Measurements

When processes are moving out of sight, it is important to have proper systems in place to measure performance to standards. You need to work with the service provider to set up measurements that are acceptable to both the parties. Periodically sampling the performance of the outsourcing partner will help you gauge how effective they are in the job.

No Exit Strategy

Your collaboration with the service provider may be going great. But you never know when the reasons crop up to disengage. There should be pre-determined criteria to exit, if need be. Generally both the parties are required to serve a notice before walking out.

Avoid these mistakes and you will be on your way to success in your outsourcing endeavor.