What are the challenges of outsourcing?

How to
deal with them?
Outsourcing, though extremely popular in this age with every business adopting the practice for
its benefits, has a few concerns associated with it that are not easy to dismiss. The practice
offers the allure of cost savings, increased efficiency, and access to specialized services that
might not be available in-house, yet it's far from a straightforward or effortless process.

Challenges of outsourcing are not many, but that does not mean you can disregard them. You
can effectively tackle these challenges which is why we have compiled in this article a list of
concerns about outsourcing and their ideal counters.

Hopefully, after reading this article, you will have a more optimistic view of the nuances of the
outsourcing process!

What is outsourcing?
Outsourcing stands as a strategic move to ensure top-notch handling of your tasks by skilled
experts. At its core, it involves entrusting your work to individuals or organizations equipped with
the precise abilities needed to fulfill your project needs.

They, your outsourcing partners who you select after a rigorous process, become your go-to for
the project. What's remarkable is their capability to deliver services at reduced costs, a definite
plus for your company's bottom line.

While outsourcing might seem like the latest trend, it's been in play for ages. The reason for its
undying popularity is its significant impact on the economies of numerous developing nations,
serving as a crucial pillar in their growth and various other benefits that it provides.

What are the challenges of outsourcing and their solutions?

Outsourcing, though not such a complicated task, has its fair share of challenges which you can
easily overcome by following the right advice and taking appropriate measures. Just make sure
that you don’t get overwhelmed with the challenges and tackle them efficiently.

The list of a few concerns associated with outsourcing is as follows:

Cultural differences
In outsourcing, cultural differences among teams stemming from diverse geographical locations
and varied backgrounds, including the partnering organizations, pose significant challenges..
This is mainly due to the fact that the team are geographically located in different regions and
come from diverse backgrounds. Organizational differences also result from the fact that you
and your outsourcing vendor are two different organizations working on the same project.

These cultural differences are not favorable for an ideal working environment. Apart from
affecting the communication and collaboration within the team, it also creates friction between
the teams which leads to unfavorable consequences. Addressing these cultural divergences is
crucial for cultivating an optimal working environment.

Solution: Organize sessions for awareness and knowledge

To overcome this challenge, you should consider organizing training sessions for your team that
is due to be in collaboration with the outsourcing party so that they can be more aware and
knowledgeable about the difference that may arise in the future. This will also promote
understanding and collaboration with the team.

Choosing a reliable vendor

A reliable and trustworthy vendor is crucial for the outsourcing process to sail smoothly but
choosing a reliable vendor is not a simple task. Several companies have negatively reviewed
outsourcing because of their bad experiences with their chosen vendor. It is easy to fall into an
unfavorable situation like this if you don’t put the right amount of effort to find the perfect vendor.

Contracting an unreliable vendor may lead you to incur increased costs with no value for money
as their work quality is not up to the mark. They may also not have the right resources to cater
to your project needs.

Solution: Do extensive research about potential partners

Therefore, it is essential to carry out extensive research before deciding upon your outsourcing
partner as this decision determines the course of your project development. Also, avoid looking
for vendors that offer the cheapest prices as this is not the right criteria one should set. You
must analyze the services they offer and also dig up their past client reviews to get in-depth
insight.

Project control and decision making

When you outsource your business operations, you might feel a lack of authority and ownership
over your project. This is due to the fact that you are unable to exert the same level of control
that you have over an in-house staff. Issues arise when the goals and standards of the
outsourcing company don't align with those of your parent company. This discrepancy in
alignment might lead some vendors to prioritize profitability over quality, potentially impacting
the standard of services delivered.

Solution: Maintain good communication and perform checks to exert authority

One way you can exert authority over the outsourcing company is by keeping yourself in loop
with them and performing regular checks. As a result, they will not be diverted from their original
purpose of serving you and will work hard to develop products of superior quality.
Change management
Managing change within service outsourcing presents a formidable challenge, primarily due to
its profound impact on individuals' emotional well-being and level of engagement. The process
of change often elicits a range of negative psychological responses among employees.

They end up feeling uncertain about their roles or the future and worry about change in their
routines, which contributes to their worry and sense of detachment from the business. Their
ability and desire to adapt, as well as their productivity and project success, are all impacted by
these emotional responses.

Solution: Value strategic communication and engagement

To address these challenges, prioritize strategic communication and engagement. Implement a
comprehensive communication plan that transparently conveys the reasons behind the change,
addressing concerns and ensuring clarity. Involve employees in the decision-making process,
fostering a sense of ownership and participation. Moreover, provide adequate support,
resources, and training to aid in the transition, reducing anxiety and resistance.

Complicated legal processes

When you sign your contract with the outsourcing agency, both the organizations become
legally bound to each other. Concerns regarding data protection, confidentiality, liability,
regulatory compliance, and intellectual property (IP) rights are paramount in outsourcing
projects. The varying legal landscapes across different countries further add to these concerns,
making it essential to navigate these intricacies carefully.

Solution: Seek top-notch legal guidance and expertise

To overcome these challenges, organizations can implement streamlined legal guidance and
expertise. Engage legal professionals specializing in outsourcing to ensure a thorough
understanding of contracts and regulatory landscapes. Additionally, make sure your contract
includes provisions on delivery and acceptance, reporting, provider warranties, compensation
and payment terms, and support services.

Exposure to data security threats

In outsourcing, one of the primary challenges is the exposure to data security threats. When
working with a remote outsourcing team, you are required to share info regarding your business
operations and assets. Entrusting sensitive information to a third-party entity, especially when
operating across different geographic regions, raises concerns about data breaches, leaks, or
unauthorized access.

You may be risking everything if your outsourcing contract doesn't contain clear language on
how important it is to secure your intellectual property and other information and resources.
Solution: Implement robust security protocols
To counter these threats, start by establishing strict security protocols and compliance
measures. Enforce data encryption methods, secure network infrastructures, and access
controls to safeguard sensitive data. Ensure that your vendor adhere to industry standards and
possess robust security certifications. Additionally, regular audits and assessments can further
fortify your security posture, providing ongoing protection against potential threats.

Hidden charges
Many businesses choose to outsource their business operations because it saves money.
However, sometimes this might not be the case and you may actually end up paying more than
what you would have paid your in-house team. This mainly occurs due to miscommunication
between the two parties about their expectations, project scope, and budget.

Additionally, outsourcing companies also charge additional fees that are not disclosed initially
and only come to light late after the contract is signed. As a result, you pay more than was
initially agreed upon, which could result in losses for your companies.

Solution: Communicate your requirements and expectations effectively

To avoid paying hidden charges, ensure that you communicate project specifications and your
expectations about the company’s role in the process effectively, without leaving any room for
ambiguity. Ask your outsourcing provider about pay scales, necessary skill sets, resource costs,
etc. It will enable you to select a suitable pricing model to adhere to, saving you money on
unforeseen costs.

What are the benefits of outsourcing?

It has been demonstrated that companies who employ this strategy at work benefit greatly from
outsourcing IT projects. Two of the many benefits of outsourcing involve implementing agile
principles and raising worker productivity by focusing on more relevant activities at work.

Enhanced flexibility
Engaging a reliable third-party in your business operations helps embrace adaptable solutions
and swiftly address issues, avoiding time wastage. Outsourcing IT projects inherently commits
to an agile and flexible work approach. This shift encourages focusing on other vital tasks while
alleviating the workload on internal employees.

Task dedicated teams

Outsourcing firms typically comprise proficient teams with comprehensive expertise in their
services. In long-term IT projects, having a specialized dedicated team is crucial. Such teams
assure consistent and dependable outputs, ensuring reliability for your business.
Dedicated teams prioritize maximum effort and adhere to top development practices, mitigating
any risks associated with compromised work methodologies. This commitment minimizes
potential pitfalls, guaranteeing a robust project development process.

Save up on costs
Outsourcing proves advantageous for your company's finances by notably alleviating expenses
tied to hiring, training new staff, and establishing specialized infrastructure. While it might initially
appear as an added cost, the benefit lies in avoiding expenditures on recruitment campaigns
and leveraging specialized expertise. The degree of cost reduction your business experiences
heavily relies on the chosen outsourcing company.

Boost in-house efficiency

Outsourcing IT projects benefits in-house employees within your organization. By entrusting
critical tasks such as system development to external companies, it enables your in-house team
to efficiently oversee other operations, such as project management.

In essence, this practice contributes to improving their work-life balance by lessening their
workload. Professional environments have shown that employees with a better work-life balance
tend to be more productive. Hence, it's beneficial for employers to consider outsourcing certain
projects as an extra step to support their employees.

How Codesy eases the challenges of outsourcing?

Codesy is at the forefront of outsourcing due to its reliable nature and the trust that it has built in
its partners over the course of ten years. You need not worry about the concerns associated
with outsourcing when it comes to Codesy, as we are transparent about our processes and
value our client’s trust over anything.

Codesy guarantees 100% client satisfaction on every project that they undertake, which is truly
a huge commitment. So, get in touch with Codesy Consulting today and find a solution to all
your IT outsourcing problems with guaranteed positive results.