Disastrous outsourcing mistakes to avoid
We are in the era of outsourcing. It’s rare to find a business that does everything in-house with full-time employees. Everyone outsources to some degree, no matter what you call it, including outsourcing, freelancing, and virtual assistants. All outsourcing mistakes happen just like any other business mistake. They happen when companies try something new or when their staff don’t have the proper training to do what they need to do. Outsourcing errors are no different.
If you want your business to be successful, you need to avoid making outsourcing mistakes, and in order to avoid them, you need to know what those mistakes are. To get you started, here are some IT outsourcing mistakes that experts believe lead to business failure:
it goes cheap
Many people don’t understand the true costs of offshoring their product development. Many small businesses that lack sufficient funds or profits will quickly look abroad when they find a development team. Unfortunately for these companies, it can do more harm than good in the long run. The lowest rates often come with high cost and poor quality. So never compromise on quality to save a few bucks.
Not properly managing the team.
Contractors, freelancers, and other outsourcing solution providers can’t help you run your business. They may manage their own internal processes, but they don’t have the staff or the time for their own. Remember, if you completely trust the managers of your outsourcing providers, they, not you, will be managing your business and its goals. While you should never overmanage anyone, you need your own management team to keep your internal and external projects moving forward.
Use of fixed price bidding in all subcontracting projects.
Related to cost cutting, many business owners believe they can use fixed price offers on everything. The fixed price is only an effective compensation for well-defined short-term projects, such as blogs or programming. You won’t get very far if you try to use it in call centers, affiliate marketing providers, or even data entry. You have to be flexible and do the necessary research with your colleagues to check all the alternatives available to you.
Having the wrong mindset.
Companies tend to use fixed prices on everything because they outsource with the wrong mindset. They see their remote workers as employees and may be treated as employees. Other companies see their outsourcing partners as startup time or staff that they can eliminate at will. But these abusive RFP processes, ruthless negotiations, or poor treatment of your vendors will only lead to disaster.
Ignore possible personality mismatches.
Business owners tend to outsource without considering potential culture clashes between their internal staff and their remote vendors. They expect their suppliers to embrace their company culture and their employees the stress that comes with outsourcing. While your vendors will always try to accommodate your situation, the success of their projects will depend on your cultural work ethic, time constraints, social status, language quirks, and general attitude. Remember, cultural adaptation goes both ways. You must also learn to accept the cultures of your suppliers in order to establish a mutually successful business relationship.
Communication
Communicating with an internal development team is hard enough. Sending this information to someone on a different continent makes you vulnerable to miscommunication and error. Software and hardware development is a complicated and complicated process that involves social interaction and frequent sharing of non-objective concepts that often require deep communication.
Lack of compromise.
You may not see it as a problem, but not having the commitment to follow through with your outsourcing efforts is a disaster waiting to happen. Changing the needs of your projects and switching between vendors mid-project will lead to broken products, longer development times, and confusion for everyone. Organizational commitment, executive sponsorship, and stakeholder involvement are the keys to any successful initiative.
Outsourcing for the sake of outsourcing.
The biggest mistake of outsourcing is outsourcing for outsourcing’s sake. In other words, outsource tasks and problems that are better addressed internally or through other more effective tools and measures. While outsourcing is a powerful tool that can help you achieve your business goals, it can be abused if you’re not careful. Outsourcing without proper caution or knowledge can backfire and cause irreparable damage to your business and reputation.
With modern technology and global reach, outsourcing should be an important tool in turning your business into the efficient, agile, and competitive business of your dreams. You just have to avoid the pitfalls of believing that it is easy and cheap. Keep this in mind and your efforts will lead to business success rather than failure.