3 Ways to Mitigate Outsourcing Risks and Prevent Failure

Many businesses nowadays are looking to outsource their secondary functions. Since there are considerable benefits to outsourcing, why not? It’s cost and resource-efficient. It allows you to access a bigger talent pool. It gives your staff more time to focus on core business activities and the business’ figure strategy.

As always, when there are benefits, there are risks that follow. No matter what you are outsourcing, there are risks of compromised quality, breaches in confidentiality and data loss. There might even be a loss of control and visibility over the entire process. With proper preparation and precaution, you can ensure that your business won’t fall victim to these risks. Here are three ways to mitigate outsourcing risks and prevent failure!

Plan and Communicate

Control should always remain on your side. After all, no one knows the business better than you and your employees, so it makes sense. When you outsource, you tend to lose some control and visibility to the outsourcing company. Outsourcing takes the work out of your employees’ hands. However, at the same time, it also takes out a lot of the decisions. How can you make sure these decisions, being made by the outsourcing company, don’t lead to the failure of your business?

It’s extremely important to plan with your employees. Discuss what decisions are acceptable to be left to the outsourcing company and what aren’t. Create a management plan comprising of processes and communicate this with the other side. This can include a progress timeline with key dates for meetings.

A good tip is to hold frequent stand-up meetings that are short and quick. The provider’s team should dial in on these. These meetings can be as frequent as daily and should last no longer than 15 minutes. The focus is to give a brief update on how the project is going, tick things off the list and identify those that are still outstanding. This will keep both ends on track!

Another thing that is crucial to the success of outsourcing is to identify the main contact on both ends. Make it easy for both your employees and the provider to communicate with one another. It’s also important to have someone on your side of the business to deal with any questions the outsourcing company may have. This way, you’re able to receive updates and provide feedback more efficiently.

Research and Monitor

One of the biggest risks of outsourcing is that the quality of your output will be compromised. The outsourcing company doesn’t know the business as well as your employees do. Not to mention, you hired your employees for a reason! They’re the cream of the crop. Outsourcing means entrusting your business to those who you did not hire. It can be daunting when you aren’t sure whether the people doing work for your company have the right skills to do so.

The key is to do your research. Your provider must share your values in the sense that quality is their main commitment. Many factors play a part in choosing the right outsourcing company for your business. Important things to consider are the provider’s reputation and performance rankings. A company that has been around for a while and involved in many successful projects is a good indicator. Be sure to check the provider’s website – if they can create something that presents themselves well, it’s a sign they can do the same for your business.

Once you’ve found a good provider, consider arranging for one of your own employees to be placed in their organisation. This is a good way to monitor what is happening at the outsourcing company. It’s also a great way to increase the quality of communication because it gives your company another channel. Doing so can allow you to understand how the provider works as well as help them understand what your business is after.

Protect Information

Most, if not all, business relationships have underlying confidential information. This is what forms a transaction between a client and a service provider. When it comes to outsourcing work, it means giving the outsourcing company access to sensitive client data. A worst-case scenario could be that the provider steals or leaks information and is the reason why it should be protected.

The outsourcing company understands it is being entrusted with sensitive data. To ensure none of this is disclosed, an agreement should be signed. This can be a confidentiality or a non-disclosure agreement. This will safeguard your business and allow the provider to be responsible if anything happens to this information.

It’s also a good idea for your business to invest in cyber insurance. Cyber insurance will protect your business from loss of information and privacy breaches. There are many insurance companies out there that offer cyber insurance. They can give professional advice and help you ensure that your business has the right protection

Once you have identified the risks of outsourcing, you can put in place mechanisms to mitigate these risks. If you follow these three tips to mitigate outsourcing risk and prevent failure, your outsourcing plan is bound to be a success!


Author bio:

 Dunedin-based freelance writer Cloe Matheson has written on a wide array of topics from travel and lifestyle to career and business. Check out more of her published works here.

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