Hello readers,

This blog will cover the advantages and drawbacks of Outsourcing that will help you while selecting an outsourcing partner. Before diving in, let’s have a look at what it implies. Outsourcing simply implies receiving "sources" from "out" – outside., it's usual practice among companies to hire a third party to perform services and create goods on their behalf.

Benefits of Outsourcing:

There are a ton load of benefits that come with outsourcing. Although they might overlap as the general nature of benefits is that one emanates from the other. So here we are going to have a look at the six most prominent benefits of outsourcing. 

1. "win-win" relationship: 

both the service receiver and the third party as service giver benefit from outsourcing. The firm that outsources services receives the input of experts, which may not have been available otherwise. Also, companies can outsource services at a fraction of the cost while also allowing them to scale their companies faster. On the other hand, firm giving services gets to tap into the potential of experts by providing them employment and a continuous stream of work. That way, it's a win-win condition for both the companies, the one who is outsourcing and the one providing it. 

2. Technical Challenges: 

The highly-technical ad operations tasks could easily create roadblocks and distract your team from the ultimate goal. Further, no brand can recruit and maintain experts across all departments. So it's only logical to outsource services. Otherwise, your team will get weighed down by the technical details. Whereas a trusted partner could focus on things that'll grow your audience. With the aid of their experienced insight, you can discover various ways to improve your operations.

3. You get a fresh perspective: 

Do you find your in-house team working around a similar strategy, outdated perspective, and age-old data? If so, try expanding to indulge in outsourcing by third-party onboarding vendors. This will provide you with a competitive edge and a fresh perspective on your strategy, goals, and tactics. 

4. Better ROI: 

An outsourced team can boost your revenue by introducing strategies, tools, and techs that you might not easily get your hands on. The outsourced vendor will already have a pool of talented employees, the latest technologies to provide optimal solutions, and deep industry knowledge. This allows publishers to avoid large expenditures. Also, ROI implies maintaining lower costs, which can be done through outsourcing. For instance, say if the business growth results in a need for increased office space, outsourcing simple operations such as telemarketing or data entry makes more sense than moving to a new location. Also, It might cost less than the price of expanding, along with being efficient.

5. Focus on Core Activities:

 Outsourcing mundane activities can allow you to refocus your firm's resources on the activities that make you profitable. A company's operations tend to expand during periods of rapid growth, which may tie up your resources at the expense of the core activities.

6. Offer Staffing Flexibility: 

Last but not the least advantage is that most brands benefit from getting a flexible staff, which is possible through outsourcing. Operations or departments that have cyclical demands can be allocated additional resources as per the requirement with the help of outsourcing. Later in the cycle, when things slow down again, the outsourcing company can be released, which maintains a company's flexibility.

So let us understand the risks involved in business process outsourcing and how you can navigate through them.

Choosing the Wrong Supplier

Most harm could be done in cases when the service provider does not match up with your expectations. This is a case where a supplier is wrongly selected and fails to meet your requirements. Such a faulty decision to work with a provider implies an absence of risk analysis that had to be conducted. It answers questions such as the Area of your operation to be outsourced and the provider's strength in the Area, if the provider has the necessary expertise, if the provider has previous experience in taking up a project of the same magnitude, are there any testimonials cementing the success of outsourcing provide, if the provider has a web and social media presence and if it is positive, and many such concerns. In fact, big companies have separate personnel who look after all the service providers. If the need persists, they may visit the company personally.

Hidden Costs

Suppose you are a newbie in the business and a small company too. In that case, you should be very cautious about the component of cost. One of the risks involved with outsourcing is the possibility of unforeseen costs. This may result in some unexpected costs and items that were not previously included in the contract. This ultimately will result in making the project dramatically expensive and ultimately uneconomical. You should double-check the contracts carefully for any hidden costs to avoid such scenarios.

Inaccurate Definition of Task Areas

A little slip like ineffective communication can cause a negative ripple effect on the entire business. When a task area is inaccurately defined, it will result in ambiguous communication. This can be really burdensome. To avoid misinterpretations, define detailed guidelines and rules for outsourced work. Moreover, processes that are being incorrectly or partially performed should be avoided. 

Lack of testimonials

There are risks of running into the wrong service provider if you have no previous experience with outsourcing. Hence you must rely on the testimonials and experiences of past clients and references. The solution is to not rush into the process; instead, take adequate time to talk and hold meetings with potential service partners and see what and how they have worked in the past. This is required to make an informed decision before selecting a provider. 

Tacit Knowledge

There are two types of knowledge, tacit knowledge and explicit knowledge. If you are partnering up with a partner who provides you tacit knowledge, then it would be difficult for you to translate it into your understanding. For any outsourcing, unhindered knowledge transfer is a building block for a successful business. Moreover, be sure to precisely define the handling of both aspects of the contract. This can be done by proper documentation of how knowledge will be transferred. 

Switching provider

It is possible that a provider whom you selected on a first basis may not prove to be the best for you. There are no options other than changing the provider in such a case. Although it poses the risk of losing your data to a service provider because you didn't safeguard your intellectual rights in the first place. Having an intellectual property rights management plan could prove beneficial for such unforeseen circumstances. It will help you to remain operational when changing providers. Also, always define the consequences of losing your data in the contract. It will help to fix accountability on the parties involved.

Fiasco on provider's end

This is the situation that is the scariest. It can be a result of any factor; even at the time, sit is beyond the provider's control, like a natural calamity in the country of the provider or a fire breakout at the workplace. In such a case project has to be stopped abruptly as the BPO service provider could not meet expectations. All this combined complicates the workflow. If it is not taken care of earliest, one may risk losing customers.  

That’s all in it. Trust me, if you navigate tactfully to avoid these drawbacks and keep going by encasing the advantages of outsourcing; you will reap the best of it.

Happy Learning folks.