q Five Major Reasons for Outsourcing Failures

5 Major Reasons for Outsourcing Failures

by | Published on Feb 1, 2016 | Business Process Outsourcing

Outsourcing FailuresIn the present competitive corporate world, businesses organizations have various activities like production, marketing, finance, human resource management, innovation and so on. Businesses have always chosen to outsource some of their processes to reliable BPO companies and thereby improve their overall functioning and workflow. Business process outsourcing services include data entry services, medical transcription services, legal services and back office support. Over the years, outsourcing has assumed a more valuable role with organizations looking forward to the value addition that outsourcing can offer them apart from the many other benefits such as:

  • Cost savings
  • Savings in terms of time, manpower and effort
  • Efficient management of back office processes
  • Ability to focus on core competencies

However, the scenario need not always be a pleasant one. Sometimes, outsourcing can have a negative impact if not chosen wisely. Here are five major reasons for outsourcing failures.

  • Poor communication: While outsourcing your functions to a third party, ensure that they clearly understand their responsibilities and the tasks entrusted. If the service provider does not understand their role, they may not be able to fulfill their duties successfully. There are many reasons why your outsourcing partner may fail to understand your requirements – language capabilities, cultural differences, technological limitations, differences in industry terms and so on. Hold regular meetings to discuss important matters you wish to communicate. It is good to maintain a strong relationship with the service provider to ensure better service and also monitor their work at regular intervals to minimize any errors.
  • Low quality work: When a project work is outsourced, your business managers will not be able to supervise the work. This may result in low quality output.
  • Different interests: Sometimes your organization and the service provider may differ in interests and work culture. Therefore ensure that you choose a suitable service provider who shares your interests so that it becomes easy for you to work with them.
  • Choosing a cheap service provider: Service providers who offer to work at cheap rates are not reliable. Cost savings should never be the primary goal of outsourcing. The cheapest service provider in the market will give you only poor quality work that will have an overall negative impact on your organization. Instead of putting cost savings as the primary objective of outsourcing, focus on other more important and valuable goals that can be achieved by outsourcing.
  • Unrealistic expectations: It is important to choose service providers who do not overstate their competencies and advantages. It is also vital not to maintain unrealistic expectations and outsource business processes that would be better managed by in-house employees. To have a clear idea about the kind of service you can expect from your service provider, ask for a free trial project.

Now that you have an idea about why outsourcing fails occasionally, be extra cautious when choosing a BPO company to partner with. Understand the risks involved and carefully choose the tasks that you can safely outsource.

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