Failure of Offshore Outsourcing

Earlier several offshore projects failed for various reasons. But now all of them have learned from their mistakes to sharpen their skills in offshore vendor selection, project management, project execution and now succeeding in their offshore projects. Following are some the reasons you should know for offshore projects failure and plan before you start it.

Scope of Project was unclear
Detail about the goals, vision and scope of the project must be made clear to the offshore vendor by the outsourcing company. Otherwise problem may occur in understanding the project by the vendors and they can do different thing than what is asked to do.

Cost should not be the only criteria for project.
Often outsourcing to the lowest bidder may not be the right choice because that may reduce the quality of work. So reducing the cost should not be the prime concern. It may hamper in the project and you may have to spend more money to finish it

Timeline and Delivery
Proper delivery time and timeline should be given else again there will be a chance to misunderstanding between the companies.

Hidden Costs
Change in technology may lead to increased costs of the business. This is one of the major hidden cost that the company face. This cost are not shown at the start pf the project..

Retention of Key Personnel
Frequent turnover of key personnel in the outsourced team may lead to increase in time and effort which increases the cost of the project. Thus the project can fail. This is true in India where the employee retention rate is less than 90%.

Government Regulations
Legal bonding of both countries need to be kept in mind before starting of a projects.

Outsourcing Service Provider sometimes fail
Though this may occur very rarely but if the vendors can’t give quality work then project may fail drastically.

Cultural Differences
Since different culture people work in the offshore vendor’s team so idea in a problem varies from person to person which may misleads to the project. In fact majority of businesses that offshore IT and BPO projects quote cultural differences to be the primary problem they face in offshore projects.

Cost of Overseeing the Project
The quality and performance of the offshore service provider must be checked by outsourcing business They must also check the attention and time employee spending for the project.

Communication Problems
Different time zone from the client may cause problems in communicating in real time. There is often a chance of misunderstanding because the slow response to the emails. This may derail the project. Communication failure is one of the prime concern for the failure of the project. In fact research studies show that over 10% of projects are delayed because of communication problems.

Early issues
Whenever two companies’ work in a project, early problems and issues will occur definately and offshore projects are of no difference. Both of them may find it difficult and discourage to work through them and this may finally lead to the failure of the offshore project.