What is the risk of outsourcing?

What is the risk of outsourcing?

Outsourcing is for many companies nowadays a perfect solution to not only cut costs when it comes to various business areas such as production and design, but it also allows these businesses to get access to top talent either inland or across borders.

However, as beneficial as outsourcing can be, there are some concerns involved that you need to keep in mind. These aren’t necessarily factors in every scenario or working relationship, but nevertheless, be aware that there could be potential risks.

In today’s blog, we will be taking a close look at what the risk of outsourcing potentially could include, and how business owners can identify potential problems when choosing an outsourced partner and find solutions to reduce any negative impact.

Let’s look at one of the main risks first.

Lack of proximity could strain the turnaround of tasks

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Outsourcing, whether it pertains to physical labour and manufacturing or a more digital nature, such as social media marketing, PR, HR or accounting, often brings with it a lack of proximity, which, when working in significantly different timelines could carry the risk of lagging deadlines.

To pre-empt these potential delays, it is important that communication lines are established upfront, and that business owners provide clear direction for outsourced partners on expectations and communication streamlining.

Loss of control by not being physically present

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Now, it goes without saying that especially in cases where frequent travel is not possible, companies could feel a certain level of loss of control in terms of physically overseeing.

Also, not being able to observe progress in person could mean that there is another potential risk: a lack of quality when outsourced partners do not clearly follow the scope of the brief of a project and end up delivering sub-par work.

This, though, doesn’t mean a business can expect failure from the start when it comes to outsourcing. It simply means that before anyone signs on the dotted line, it needs to be established from the start what a business will require and how this final output or product will need to look like.

By putting these pillars in place, both a company and an external provider can be on the same page and follow through on deliverables.

A difference in business culture could cause some confusion

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Every business has a specific “personality” and way of working, and this “culture”, so to speak, might not be universal to all outsourced partners of freelance professionals. This is why it is important to have pillars in place that your external partners can reference – ideally in shared digital documents – that will ensure they understand not only what your expectations are, but what your mindset is when it comes to a planned project, product or tasks.

While some costs are saved, others can increase

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When a business outsources production especially, it needs to bear in mind that when these products are ready for market and will be distributed in their area, the cost of transportation can be significant.

However, there is also the opportunity to distribute products to the area where an outsourced partner is based, which could work in favour of a company that is keen to branch out to more consumer target markets to increase profits and brand awareness.

Some other potential additional costs to keep in mind could include the overheads of an outsourced partner. If the said partner does not have access to all the technologies available to complete a project successfully, they could potentially bill a client for extra materials or other business items needed. Again, this is an area where a business owner needs to ensure that a potential business partner has all the capabilities needed, and if any additional costs should be considered, that these be included in the final project scope.

Confidentially could be at risk with the wrong partner

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When it comes to new product launches or other innovations, many businesses would likely be excited by how they will enter the market with brand new designs or functionality that will attract new clients and delight already existing clients.

That being said, when an outsourced partner does not protect confidentiality, there is a potential risk of information “leaking” or that knowledge of a business’s product be used for other clients’ projects.

This is why it is vital to always choose a partner that you can trust for your outsourced projects: do not work with someone that you are not 100% confident will work in your best interest.

Should I consider outsourcing for my business needs?

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Although the risk of outsourcing is a factor that companies need to consider when it comes to getting in external support for their business processes, there are ways to avoid backlash or failure.

Keep the following guidelines in mind:

  • Always research the credentials of an outsourced partner first. Check their reviews, their past results, and if they received any bad reviews.
  • Confirm that your outsourced partner has the capacity to perform the tasks you have in mind.
  • Ensure that there is clarity on expectations. Do not assume that all are aware of what is needed if there is no clear paper trail of what needs to be done.
  • Be thorough with budgeting: factor in all costs that an entire project will call for, including distribution if needed as such.
  • Make confidentiality a priority – include your expectations on this in documentation.

Outsourcing can provide an incredible layer of support to businesses – especially to those companies that might be experiencing technical difficulties in their areas of operation or lack the expertise to complete a project. Do not disregard this worthwhile venture: outsourcing could be the step you need to truly grow your business!

If you are a potential client and you are ready to experience an exceptional journey of design for your next project with amazing results, contact us today. We would love to hear from you and to provide the personal touch that we have become known and respected for as one of Melbourne’s leading industrial design teams!