Reasons for Failure |
Why failure happens
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How to mitigate these reasons |
Outsourced the wrong work |
- New to outsourcing and immediately started outsourcing core and critical functions of your business.
- The outsourcing provider did not meet the expectations and instead performed poorly.
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- It's always better to start small with non critical components first thus giving time to the provider company.
- Do not expect similar or more productivity immediately.
- Do not expect enhanced performance levels immediately.
- Conduct regular reviews and assess ability of provider and consistency of performance.
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Management not fully committed |
- In-house employees will resist to any change and give way to rumors. They may become disoriented due to lack of clarity on their future.
- Management may then crumble to social pressure and reverse the change.
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- Before outsourcing it is very important to take management consent and align the team to company goals.
- Reallocate, reshuffle and train your staff to take up new roles if possible. If not then management should be accessible to address the team.
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Little documented knowledge |
- Outsourced work with little documented knowledge and your in-house employees did not cooperate fully with offshore team as they resist to outsourcing.
- Or you outsourced work which requires a lot of interaction with your staff initially and they may not cooperate.
- Such scenarios lead to failure as the provider company is left with little help.
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- Never start outsourcing with work which is not well documented.
- You can always follow it up with more complex and less documented work once the interaction between teams is smoother.
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Expecting savings over night |
- You feel disappointed with the productivity and performance levels.
- You feel a lot of precious time and effort went into trainings, travels and knowledge transfer to offshore teams.
- You feel too much interaction is required between the provider team and your team for managing and executing work offshore.
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- A proper knowledge transfer strategy prepares the provider for challenges of your work.
- Running a Pilot ensures that issues are worked out and the foundation is laid for the provider.
- In long-term relationships, conduct yearly reviews. Assess ability of supplier and consistency of performance.
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Onsite team feeling insecure |
- Your employees become unsure of how outsourcing will impact their jobs.
- In effect they resist and do not cooperate with offshore teams as a result the outsourced work suffers.
- Insecurity leads to rumors within your organization and management may reverse the change.
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- Before outsourcing, educate your people. Give them different role and responsibilities if possible and align them to company goals.
- Honest communication with your employees will reduce resistance.
- Senior management needs to be ready to address employees and rest the rumors.
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Selected the wrong provider |
- Many companies end up selecting the provider with the lowest rates and thus run into a risk of being in the hands of an immature and inexperienced provider.
- Provider is located in a geographically unstable country.
- Provider company is financially unstable.
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- Running a Pilot ensures you assess the capability of the provider company.
- Constantly monitor progress of the offshore provider.
- Take feedbacks from end customers and run quality audits periodically.
- Study the stability of country and provider both financially and politically.
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Insufficient operational readiness |
- Communication with an offshore team requires improvement in network and security policies. A reliable and cost effective telecom back bone is also a must.
- Without proper planning; your communication with offshore team may suffer and be cost ineffective
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- Prepare an infrastructure which enables your managers to smoothly monitor work offshore.
- When going in for offshore outsourcing, make sure your network and telecom backbone are ready, reliable and cost effective.
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Risk to IPR and confidentiality |
- Legally and socially not all offshore countries are best placed to provide you confidentiality and IPR protection.
- If you do not consider this risk initially you may end up fighting legal battles to protect your IPR.
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- Always select proven destinations for offshore outsourcing like India, where over the year's providers have created the legal and security infrastructure in place to protect client IPR and confidentiality.
- Additionally you may look for ISO: 27001 (Information Security Management System Standard) certified providers.
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Cultural difference effecting customer |
- Cultural incompatibility may arise due to difference in work culture and work ethics
- You find it difficult to adapt to the style of governance and value system of the provider company.
- You are disappointed with the attitude, aptitude and problem solving capabilities of provider company employees.
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- Make sure you analyze the provider for their work ethics, employee attrition, employee attitude and aptitude and governance to select a compatible service provider.
- Run a pilot first to be sure on your decision on provider.
- Treat the supplier as part of your extended organization and not merely as a contractor. This will close cultural gaps and lead to better working relationships.
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