7 Outsourcing Challenges Your Organisation May Be Facing

Organisations have gone past the basics of talking about outsourcing or offshoring and executives now understand and use it effectively in driving the growth of their businesses. Indeed, the number of organisations that choose the outsourcing strategy is growing rapidly. 

The global outsourcing market scaled $100 billion in 2021, with organisations feeling positive about finding an outsourcing partner for a number of reasons. Outsourcing as a business model, has helped many organisations reduce costs and gain access to services that support their business goals by lending their expertise.  

A Deloitte survey shows that around 88% of organisations that outsource some of their roles or functions admit that their choice is beneficial for their business and they achieved their goals. Definitely, everyone wants to be among those counted among the satisfied outsource clients. 

The positives of outsourcing are clear, nonetheless, outsourcing is not so easy for every organisation. There is still a pocket of business leaders and managers who are dissatisfied about their outsourcing results.  

If you are among the percentage of leaders who have been unimpressed by the results of your outsourcing project, we would like to share seven reasons why you currently face outsourcing challenges and how you can solve them. 

7 outsourcing challenges you may be facing 

Not Planning your budget 

When choosing to outsource, organisations put emphasis on upcoming expenses before anything else. Statistics show that the major reason many organisations turn to outsourcing services is the opportunity to cut cost. 

However, it doesn’t necessarily mean that outsourcing is cheap. Rather, we can describe it as being cost-efficient. Poor budget planning is one of the many outsourcing challenges that can result in overpaying for the service. 

Without a critical analysis of all the pricing peculiarities for the service offered to you, you risk spending much more than you planned. 

Therefore, plan ahead, find out about potential costs from the vendor, and read clients’ reviews. Take your time to figure out how the pricing approach works in order to avoid any unexpected charges. Communicate your budget limitations to your vendor to prevent any misunderstandings. 

Additionally, avoid falling for the cheapest offer because you may end up paying even more. Carry out extensive research of the market and weigh the advantages against the disadvantages. 

Finding a Reliable Vendor 

There are so many organisations that sign contracts while being in the dark on how reliable their outsourcing service providers are and the expectations from them. Sometimes, it can feel tedious finding the right partner for your outsourcing needs. 

One of the common outsourcing challenge your organisation faces may be doing a proper background check on your vendor. When you don’t do this, you end up getting low quality of the project. 

If you’re are new in the outsourcing landscape, you will likely have the challenge of finding a reliable partner. This often happens due to a lack of previous experience working with outsourcing firms. 

When choosing the best vendor for your project, here are a few things to keep in mind and consider properly: 

  • The experience of the vendor (Are they reliable?) 
  • The number of projects and clients they have handled. 
  • Clients’ reviews 
  • Do they have access to the latest technology? 
  • How well they communicate, etc. 

The list differs from one organisation to the next. However, please, feel free to research your options of available providers carefully, prepare your questions and then seek clarification before choosing your outsourcing partner. 

Choosing the Right Approach to Outsourcing 

Finding the right strategy for outsourcing your project to a service provider is critical if you want to gain expected results and be cost-effective. The approach you choose has a significant impact on the effectiveness of your project. 

Just as organisations differ, there’s no one right approach to a successful outsourcing project. In framing your outsourcing model, major points of consideration should be your organisation’s goals, budget, scope, etc. 

In order to achieve expected results from your outsourcing project, it is advisable that you study the best outsourcing practice 

Communication Barrier 

A lack of effective communication is one of the most common outsourcing challenges that many organisations face which sometimes leads to a decrease in the quality of project delivery. Organisations that are new in the outsourcing process sometimes experience difficulty in maintaining proper communication with their outsourcing service provider. 

If your outsourcing partner does not understand what your expectations are, the project results will likely not be to your standards. For instance, if your organisation outsources its IT function and needs a product developed, there may be a misunderstanding over what the final outcome should be like. 

To resolve such issues, it is a good idea to keep an open line of communication. Also, regular reviews of the project will help you identify mistakes and suggest changes you require. 

Problem of Control 

Another common outsourcing challenge that businesses face, especially in their initial days, is the inability to take full control of a project. Ideally, this is a common phase that every organisation passes through because the outsourced task was previously handled by their team. An external partner is not your in-house team, so the level of control is dependent on communication and the location of your vendor. 

However, it is important to bear in mind that when assigning your project to a third-party, you would not have complete control over how some tasks are performed. While you will usually discuss the level of involvement at the start, outsourcing will not make much sense to you if you are used to being in complete control of a project. 

The transfer of control means you need to rely highly on your vendor. Therefore, choosing a reliable partner is crucial. 

Before choosing an outsourcing partner, you should research their experience with clients and the tracking strategy that will be used. In addition, set timelines for meetings, track important metrics and KPIs. 

Hidden Costs 

The primary objective of outsourcing is wanting to gain a competitive edge in comparison to having your in-house team handle non-core business tasks. Before choosing a service provider, you need to compare the cost of your in-house team to the price estimated by the vendor. 

In some cases, there are additional expenses that may not be included in the initial cost estimate. These can add up to your budget and become a problem in the long run. 

The best way to minimise costs is to communicate with your service provider and ask for a transparent cost estimate while making the deal. You need to clearly identify your requirements for the outsourced project in order for your vendor to provide you with an accurate cost estimate for the outsourcing process. 

Preference for Quantity over Quality 

Many organisations are paying the price for bad decisions, one of which is wanting to pay little for top quality results. While you may want to cut costs, it can be very risky to prioritise that over the quality of your expected outcome; you will often feel the temptation to choose the cheapest partner. 

It is essential to choose an outsourcing partner that is best suited to deliver your expectations, and they may likely not be the ones with the lowest cost. 

Keep in mind that an expert vendor may be more expensive, but they can explain their process in detail, help you to minimise delays and mitigate any risks. They will also help you with defining your tasks and selecting the best candidates for the roles and functions. 

The Bottom Line 

If you are new to outsourcing, you will likely face some tough outsourcing challenges at the beginning. You may also have gotten your last outsourcing decision wrong even though you have a bit more experience. However, this can be minimised by choosing the perfect service provider for your organisation. It is also vital to do extensive research of outsourcing providers that will best suit your project. 

If you follow the solutions outlined here, you will make an improvement in your outsourcing decisions. 

At Workforce Outsourcing, we understand the challenges associated with outsourcing and mitigate these risks while working with clients to achieve their outsourcing goals. Our clients have consistently remarked on our reliability and penchant for offering and providing only the very best at relatable costs and relatively fast response. 

We can help you right your wrongs and ensure your business continues to scale. 

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