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Top 10 Biggest Myths & Misconceptions of Outsourcing

All things come with certain myths and misconceptions and the business of outsourcing is no different. It is very important to bust them as these begin to prey on one’s mind and tend to influence decision making negatively. Given below are the most notable 10 myths and misconceptions regarding outsourcing that one must get over with in order to take profitable business decisions.

Outsourcing is Expensive: This is outright false. Outsourcing to places like India has always been very profitable for organizations based out of the United States of America, United Kingdom and other European countries. They outsource heavily to Indian companies as they get to save a lot on salaries, infrastructural costs and other additional expenses which they would have to incur if they were to get the job done at their end. Perhaps the biggest motivation behind outsourcing is the money companies save by getting the job done from a vendor stationed at a remote location. The fact that outsourcing is expensive is undoubtedly one of the biggest outsourcing myths and misconceptions.

You must be huge to benefit from it: It is not only huge corporations that outsource and benefit from it. Even small and medium-sized companies outsource and can gain significant profit by outsourcing. Benefits from outsourcing have nothing to do with the size of the company. Even small companies have an HR team and Payroll team. They also incur overheads just like big companies. They too save when they outsource. You need to be a huge organization to be able to outsource is one of the biggest IT outsourcing myths.

Outsourcing will ruin your work culture: It does not. On the contrary, if your outsourcing team is talented, it will only make your work culture more diverse, vibrant and competitive. A competent in-house team keeps your core business running. An equally competent outsourcing team keeps that set standard of performance intact. Companies have been outsourcing to India for years now and have experienced that competitive advantage.

You start losing control of your business: This again is one of the biggest outsourcing myths and misconceptions. Working with vendors with a transparent and proven risk management process will ensure that the organization does not lose control over its business. Companies can always question their strategic partners over their management of similar past problems. Communicating through appropriate channels and sharing information by setting up something such as a common VPN or custom cloud solution also helps maintain control over business.

Savings are the only reason why companies outsource their projects/operations: It is true that the main motive behind Outsourcing to India is the cost factor. But there are other equally important factors as well such as access to a specialized skill-set, similar quality at a lesser cost, enough time to concentrate on one’s core business, increased profits and overall efficacy. More importantly, the accountability factor ensures that the offshore vendor is always in touch with the company that has outsourced its business, maintaining constant communication to keep the client in the loop. That commitment to deliver the best is perhaps the best assurance any business can ask for, something that at times ranks even bigger than money in terms of importance.

In-house departments are more cost-effective than outsourcing agencies: Elaborating further on the cost factor that has already been written about in the point before this one, you need to think rationally before giving into that temptation that an in-house team might be lesser expensive than an outsourcing team. Does your company’s hiring manager know what skill-set to look for in the IT professional? What if your in-house IT Team becomes stagnant or fail to inspire any further? What if they begin to produce a series of poor results? Would you be prepared to lay them off and pay severance packages? What if you wish to scale back? Would you still be prepared to pay the same salaries? Considering these, expenses will always be high in-house.

Outsourcing weakens the Economy: Here is a fact good enough to kill this inconsequential myth among all IT outsourcing myths once and for all. From 1995-2002, USA added close to $230 billion to its output through outsourcing only to cheaper destinations such as India and other Eastern countries. This also made American companies more competitive and left them with enough time to focus on things of higher importance. Western companies have been saving hundreds of millions of dollars simply by virtue of outsourcing their businesses to cheaper avenues. As a matter of fact, this business practice has helped strengthen their economies and not weaken them.

Quality Suffers: To debug one of the most baseless and biggest outsourcing myths and misconceptions, here is a true fact. The vendor on the other side is equally worried about your project as you are, fully realizing that a successful delivery will only result in more clients signing up. Failing a project will only earn that vendor a bad name with prospective clients shying away from collaborating, fearing similar outcome. A reputed vendor will always fight for his reputation and deliver the best possible service or produce the best possible product.

Data will be compromised:  Data theft and breach of privacy are known corporate offences. There is no point shying away from the fact that these do not happen. At the same time, businesses have to be more vigilant. They must have verified data security methodologies in place that ensure minimum damage. Business leaders must conduct due diligence and risk assessments while finalizing an offshore vendor. They must include necessary clauses in the contracts they sign with the finalized vendor regarding data breach and theft. They can ask for reports regarding internal audit of security, business continuity and disaster recovery.

Different Time-Zones hamper productivity:  There are many ways to overcome the time-zone handicap. The first way is to scout the globe and outsource to a vendor who is completely comfortable working according to the time that suits you the most and who has the necessary infrastructure and workforce to offer you the support you seek with your assignment. At the same time, you too must offer a free hand to let the vendor work according to the way that suits him best without putting any unnecessary impositions. Creating a work schedule and planning in advance helps boost productivity, as your vendor knows what is being expected and what to deliver by when.

 

Author Bio

Shaun is the director of Virtual Employee Private Limited, a remote staffing & tech MNC, and is responsible for leading a team of more than 1200 experts from domains like IT, Content Creation, Digital Marketing, Designing. A law graduate from Brunel University, Shaun has been instrumental in creating a business model which is increasingly being seen by industry peers as a model for new organizations in the tech outsourcing domain.

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