Vincent Sparreboom

Posted on November 23, 2009

Contrary to popular opinion, there are a few disadvantages of outsourcing which I am going to elucidate in this article. Some of the disadvantages of outsourcing are given below. First of all, I will start off with off shore risk factor. Before you take that decision of outsourcing your business processes to a particular outsourcing service provider, just consider these risk factors.

The first risk involves the knowledge transfer factors or technical and internal readiness.

The 2nd risk involves cultural factors, that is, working style and communication style etc. For e.g., the work culture in different countries will vary a lot. And this might create problems.

The countries which offer outsourcing services usually don’t boast of English as their mother tongue. The people in these countries find it difficult to understand your accent and vice versa.

There are also country risk factors such as legal factors, socioeconomic factors and political factors.

You have to remember that a huge difference is made through the internal factors within a company. 2 of the most influential factors are corporate culture and communication infrastructure.

There are many reasons why many of the outsourcing projects fail to yield the results expected of them. You cannot afford to forget everything about a business process, just because you have outsourced it.

When the environment changes, you also have to manage and modify the relationship accordingly. Outsourcing a problematic aspect doesn’t mean you are getting rid of it. You have to oversee the main process.

When you don’t do these very necessary things, it worsens the problem. You have to remember this point while outsourcing an aspect of your business off shore. Just because you are outsourcing, doesn’t mean you can break all ties with the project, and that you can forget all about it.

Most people opt for outsourcing because it brings down the operational costs drastically, reducing it to more than half. Outsourced labor is very cheap, you see. However, don’t get motivated only by cheap cost because cheap is often synonymous with poor or inferior quality.

Surely, you don’t want your service levels degrading? If it's an aspect very vital to your organization, that is, if it's a core project, then you should reconsider to outsource it. If you have the choice, it’s better to outsource the non core areas of your business.

Outsourcing projects also often fail because you cannot explain your needs properly to your supplier, nor do you take trouble to understand what or how much your supplier can actually deliver.

We outsource a lot. I’m a big fan of outsourcing and I almost always recommend to others that they outsource as many tasks as possible but please; before you outsource, consider these disadvantages of outsourcing.