Biggest Offshore Outsourcing Blunders and How to Fix Them
Offshore outsourcing has become a staple of the world economy. It’s been the secret sauce of many successful businesses around the world, but it’s not without its failures. Businesses that are new to outsourcing sometimes make mistakes that are actually manageable and can be fixed. To begin with, here are examples of these mistakes and a few suggestions that will help business owners and managers identify and quickly resolve these problems.
#1 Leaving everything to your outsourcing provider and implementing a “hands-off” management approach.
Some firms that are new to the industry think that outsourcing means giving the job to an offshore provider, expecting the other guy to take it from there, and getting the same results as when the work was being done at home. Don’t expect the outsourcing provider to read your mind.
“It’s almost impossible to convey 100% the desired outcome of an IT outsourcing project,” says [Romi Mahajan, president of marketing consulting firm, the KKM Group]. “Only the company knows exactly what it wants to achieve. Don’t think the outsourcer will do all the thinking for you.”
Business goals can be moving targets, and if companies don’t keep explaining those goals throughout the process, the relationship will sour fast.
Nothing good comes out of a business transaction that lacks the foundation to get the job done. By foundation, we mean employee training and skills development, managerial control, technological infrastructure, and a good working relationship with your outsourcing partner.
An essential part of outsourcing is global collaboration. Businesses should build a mutually beneficial partnership with their offshore providers or vendors. It’s a give-and-take relationship where both parties contribute to the success of your outsourcing strategy.
#2 Having insufficient knowledge and understanding of the cultural values and norms of your outsourcing staff.
Ethnocentrism is a common malady even in an interconnected world like ours. It may be overt or subtle, but it’s common behavior among those who are ignorant about other cultures. They are prone to “judging another culture solely by the values and standards of one’s own culture.”
Fortunately, one’s lack of understanding about other cultures can be remedied through education. That’s why, if you’re outsourcing and you have domestic staff working out of your U.S. office, part of your employee training should be an introduction to the country where you’re outsourcing.
While the breadth of one’s culture cannot be contained in a single training course, a continued interaction between your onshore and offshore teams can cultivate an open mind and a welcoming attitude towards people with different backgrounds.
After training, encourage regular video conferences with your staff. Schedule trips to each other’s countries to meet members of the other team in person, which is what entrepreneur Rebekah Campbell did when she was building her app development company.
Research the country to which you intend to outsource. If possible, visit it.
At the same time, I heard stories from friends who were having success outsourcing development work to the Philippines, so rather than looking for development shops online, I packed my bags and flew to Manila. I met other companies with offices there and heard how they had built their teams. I met start-up incubators and learned about the local tech community, and I met recruiters to see if we could hire high-quality local developers. Along the way, I discovered Manila’s thriving startup ecosystem. The developers were passionate about building great products, and everyone seemed enthusiastic and hardworking.
#3 Letting the fear of overspending prevent you from investing wisely on people and things that matter most.
People who travel to a place they’ve never been to before may feel threatened by their new surroundings. They have a constant underlying fear of losing their money and personal belongings to thieves. It’s the same kind of fear that attacks firms that are new to outsourcing and unfamiliar with the country in which their service provider is located. And so, they tend to tighten the purse strings unnecessarily and sometimes irrationally.
Minimizing costs is good. It’s actually one of the reasons why businesses outsource. But, there are circumstances when you have to get over your fear of losing money and instead increase your spending. One of those instances is when you have to upgrade the technology you’re using.
You also have to consider the costs of doing business in another country. Consider these expenses as investments that will bring you greater rewards in the future.
#4 Going into outsourcing with unrealistic expectations of the results.
Higher management often make the mistake of neglecting to discuss their decision to outsource with their colleagues. A few will be skeptical and they’ll do their best to resist the changes happening in your company.
If, on the other hand, you have colleagues who are supportive of your company’s decision, there’s a possibility many of them will have unrealistic expectations of what outsourcing can do for them. Explain to them that changes will not happen overnight.
If you wanted to truly know how successful you’d be with outsourcing, set aside three months of working with your outsourcing staff. After three months, you’ll likely notice a change in the pace of your operations. It may be faster and more efficient compared to 3 months before. And because you’re spending less on general and administrative costs, you’re sure to save money.
#5 Thinking that outsourcing is just a temporary setup and can be easily dismantled once it appears it won’t work out at all.
Outsourcing is a life-changing decision for you as a client. It requires major changes in the way things are done in your company. You have to integrate your offshore staff into your processes and teach them to embrace your corporate culture. When you fail to properly welcome your staff into the fold, you risk alienating them, and this leads to lack of motivation and low productivity.
Based on the contract you signed, you have the option to leave any time, but not without going through the uneasy process of separating your outsourcing activities from your day-to-day operations. Before starting with outsourcing, think carefully on how you’ll implement it and what measures to take to reduce the risks.
Rather than go at it like a band of adventurers, ready to face the unknown, take the stance of a general ready to go to war. With a well-made plan and the right set of tools, you and your colleagues will be able to profit from outsourcing for a long time.