10 Top Reasons Why Outsourcing Fails
Outsourcing a “problem” is a mistake—a BIG mistake.
So don’t even think about it.
It’ll just create a bigger headache for you. The last thing you need is another source of headaches.
Instead, outsource problem-free, low touch processes not core to your business.
Outsourcing processes that have little impact on business continuity or that you can’t optimize any further in-house are also ideal.
Outsourcing is a challenge
Outsourcing is a challenge no matter what the process—tech support, customer service, billing. It doesn’t matter. You need to do it right to unlock outsourcing’s full potential.
So making mistakes, like outsourcing a problem, is the last thing you need.
Described below are 9 other top outsourcing mistakes. Avoid them at all costs. Alone or in combination, they’re deadly. They can derail your outsourcing project and leave you holding the bag.
1. Wrong provider
Choosing the wrong service provider is a death knell. Take your time and choose one carefully. Examine everything you can about the provider—people, experience, client size, legal matters, and so on.
2. Outsourcing for cost only
If cost is the only reason for outsourcing, you’re treading on thin ice. When cost is your objective, you often pick the cheapest service provider—without considering other needs driving the effort. Outsourcing works best when it’s done for a strategic reason—like creating competitive advantage.
3. Lack of communication/miscommunication
Communications mistakes are deadly. You won’t succeed with outsourcing without good communications. So have regular meetings and talk frequently with service providers.
And make sure they understand you. It’s not what you say that counts. It’s what they understand.
4. Not transitioning in phases
Outsourcing works best when it’s phased in. You may need to phase things in for a variety of reasons—like for training or understanding your customers better. Ultimately, though, it’s for maximizing project control. Make sure everything is working well before moving on.
5. Poor change control procedures
It’s nice when things stay the same. But that doesn’t happen in outsourcing. Things are always changing. So managing change is critical. Handling change control procedures are too. Make sure you have good ones in place. Written requests whenever possible are usually best.
6. Ineffective reporting
This is classic outsourcing mistake. It’s critical to you to get regular reports from your service provider. But you need to be selective in what’s reported. You get enough information coming across your desk. You don’t need more.
Identify the information that provides project control and has business value. Then have your provider report on it.
7. Not clearly mapping out the project
This often happens with low business value, low risk projects. Always map out projects—no matter what they are. It’s the only way you can be sure the project will be done right and that mistakes won’t come back to haunt you.
8. Poor supervision/guidance
All service providers need supervision and guidance. They also need course corrections and evaluations periodically. This will be apparent if the reports you’re getting carry the right information and you get them regularly. Poor supervision produces poor quality.
9. Buyer behavior toward provider
Some managers like to deal with providers in an unstructured manner. That’s asking for trouble. You don’t want the project to fail at tough times.
So treat the provider as a partner—an extended arm of your company. Also, keep them in sync with the company’s long-term goals as much as possible.
You can’t always address all these issues adequately. No one can. So have an exit strategy that’s relatively painless. It de-risks your business.
And don’t make it one-sided. If the service provider becomes aware of it, you can add this to the mistakes above.
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