subject: Outsourcing Risk [print this page] They say that you cannot have everything at the same time. That everything in this existence has its positive and negative attributes. Simply put, that is the harsh reality of life that we should learn to accept and understand. Similarly, outsourcing is no different. Because even if it continues to be a booming industry in this day and age, it is still open to various risks that can short circuit its success.
One of the things that you need to understand in outsourcing is that there are risks. Nowadays where more and more companies are now going for outsourcing, it is really impossible that it wont be exposed to risks. As outsourcing is a potentially risky endeavor. And if these risks are not managed well, it could ruin your outsourcing ventures. Therefore converting you as one of those people who equates outsourcing as a thumbs down sign.
Today due to intense competition, having an expertise is incredibly important. For this reason, companies are practically left with little and sometimes, they dont even have any time at all so as to handle various aspects of their businesses. As a result, a lot of these companies are now becoming mainly dependent on outsourcing. However, the undertaking has risks of its own and those planning to outsource work should be familiar with these outsourcing risks and be well-prepared to deal with them.
While outsourcing helps companies in their ventures, the involvement of third parties is not without its fair share of risks. As a matter of fact, the outsourcing risks involved are even greater when allotting work to offshore companies. In such cases, there are several issues that have to be considered thoroughly before finalizing a business deal with offshore partners.
When partnering with companies in a foreign country, businesses are quite likely to face these outsourcing risks:
1.Unstable political environment and legal hassles - If the projects are outsourced to a country marked by political instability, a company can suffer greatly due to the current political conditions and erratic laws. In such a case, the outsourcing plans require a comprehensive reassessment.
2.Project risks - How successful their project would be in a foreign land depends on how the parent company deals with the enterprise that is being given the contract.
3.Failure of plans - Over dependence on an offshore service provider together with the slip on the part of the management to keep a tab on their operations can frequently result in the break down of a project.
Furthermore, outsourcing risks are in no way minimized even when partnering with local establishments. As far as IT institutions are concerned, these are always at risk as they deal with information. These companies always face the risk of data leakage and other kinds of fraud by the third party.
Aside from this, the service provider may not be up to snuff to deliver the goods in time, which often leads to disputes between the partners. The outsourced services are barely satisfying in the first year of the contract.
