Five reasons of outsourcing failure and their solutions

5 reasons of outsourcing failure and their solutions

Why outsourcing is importanta) Helps in expanding business

b) Spending of company remains in control

c) Work is handled by industry experts

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Processes that are outsourced

a) Call center process (inbound and outbound0

b) Software development

c) HR services

d) Logistics

e) Manufacturing

Outsource right and win the race


Causes of failure in outsourcing 1. Communication gapReasons:a) Cultural differences b) Language barriersc) Technological hurdlesd) Inability of client on presenting requirements to vendore) Lack of transparency in the contract Cure:f) Well planned meetingsg) Use of technology to communicateh) Present detailed requirements to vendori) Receive regular reports from vendor

Outsourcing is a well-planned step 701 Fifth Avenue, Suite 4200, Seattle, WA 98104 +1.206.441.7760 [email protected]

2. Poor performance by vendor

Reasons:a) No technological advancements b) Unskilled workforce at vendor’s officec) Lack of transparency in processesd) Improper quality management

Cure:e) Choose renowned outsourcing partnersf) Analyze proficiency of vendor’s workforceg) Make sure processes are transparent from vendor’s end Outsource responsibly to survive


3. Unclear objectives of outsourcing

Reasons:a) Making cost control the sole reason of outsourcingb) Neglecting other objectivesc) Not examining the outcomes of outsourcing

Cure:d) Analyze reasons as per company’s long term goalse) Examine the outcomes of outsourcingf) Go through case studies related to outsourcing g) Consider other objectives like h) Access to proficient workforcei) Flexibility of processj) Quality enhancement

Outsource to expand, not contract 701 Fifth Avenue, Suite 4200, Seattle, WA 98104 +1.206.441.7760 [email protected]

4. Improper transition while outsourcing offshore

Impact: a) Rise in overall costsb) Delay in the executionc) Inefficient service

Cure:d) Plan transition beforehande) Examine each component thoroughly during transition

Outsource! Grow! Repeat 701 Fifth Avenue, Suite 4200, Seattle, WA 98104 +1.206.441.7760 [email protected]

5. Losses due to unforeseen and rising costs

Reason:a) Not forecasting the rise of outsourcing costs in futureb) Outsourcing to a region without examining its economy

Cure:a) Predict the rise of costs and outsource accordinglyb) Divide project and outsource to different regions

Outsourcing is panacea if done right


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Five reasons of outsourcing failure and their solutions