Why Does Outsourcing Fail – 10 Common Reasons

Offshore outsourcing is a powerful global business practice that allows businesses, whether they are SMEs or large MNCs, to make their processes more efficient and at the same time reduce their operational costs as well. However, in spite of the numerous advantages of offshore outsourcing, there are instances when such endeavors fail. Knowing the reasons why they fail will enable us to correct the mistakes and make the project a success.

Here are 10 common reasons why outsourcing projects can fail and how you can rectify them:

Outsourcing the Wrong Process
Often business owners think that outsourcing can be the answer to all their problems. This is not true though. Just like outsourcing is the best solution for some processes, it is best to keep certain processes in-house. Therefore, make sure you have a clear understanding about the key processes of your business and whether or not outsourcing will be the best solution.

Not Taking Outsourcing Advice
If you are a new entrant to the offshore outsourcing industry, make sure you do necessary research and seek professional advice from experts. This would inform you about the potential risks and threats and how you can further your outsourcing endeavor with maximum efficiency.

Choosing an Inefficient Service Provider
The success of an offshore outsourcing deal depends upon the efficiency of your service provider. Therefore, make sure you choose a professional service provider who understands your company and business. Also make sure they have significant experience in the kid of work you want them to do for your business. Moreover, browse through their client testimonials and case studies to get an idea of the work they do and if they have a credible reputation in the industry.

Drafting a Poor SLA
SLA or Service Level Agreement is the key to a safe and secure offshore outsourcing endeavor. If you have a poorly drafted service agreement, then you are at risk of loss if things go wrong in the course of the project. Make sure the service agreement clearly outlines all the services that you need to be provided with along with the roles and responsibilities of both the client and the service provider. In addition, mention that target deadlines, penalties in case of failure to meet the deadlines and the key milestones of the project.

Avoiding the potential Cultural Issues
The offshore service providers are generally located in different countries. Thus there are bound to be cultural and work related differences between both the teams. If they are not addressed beforehand, they are bound to cause problems in the future. Therefore, make sure you address and solve these issues well in advance. Consider organizing meetings and workshops for both the teams so that they can have a better understanding of each other's culture and be prepared to work together.

Losing Control over the Project
Outsourcing doesn't mean that you can simply delegate all the work to your service providers and forget all about it. In fact, if you don't make it a point to supervise and keep a check over the proceedings of the outsourcing project, you will lose control over the whole thing and not be sure if things are going the way you want them to. Therefore, make sure there is effective communication between your team and that of the service provider and you follow up with all the proceedings.