Outsourcing - BPO
Making a Decision to Outsource: Strategic Constraints
Many companies are reluctant to dive into outsourcing ocean because
of various reasons of strategic nature. As far as strategic goals
are touched upon, managers are concerned with the following issues:
- Risks and dangers of transferring too much managerial power
to one partner. Companies fear to be too dependent on one offshore
partner because its failure to meet commitments will definitely
result in large losses for outsourcing company. To reduce such
risks companies may diversify them, selecting several offshore
vendors for partnering, in addition to thorough geopolitical analysis.
- Danger for senior management to become obsolete. When part
of functions is transferred to offshore partner, it usually results
in lay-offs. This can become a serious obstacle for companies
willing to outsource, as they may face strong opposition from
its own personnel and labor unions. In both cases indecisiveness
and delays in acting may result in low effectiveness or even unprofitableness
of outsourcing.
- Danger of becoming dependent from offshore provider. When considering
outsourcing possibility, the companies should assess the consequences
of vendor failure. The results of such analysis may vary greatly
for different companies. To reduce possible risks of failure to
carry out delivery schedules, companies shall work out legally
binding agreements with tough conditions and heavy penalties.
- Protection and security of confidential information. Most mature
offshore vendors enjoy more impressive security practices than
internal ones of the outsourcing companies. However, the risk
of commercial data theft or security breach significantly increases
when working in international business. Although this issue rarely
presents a serious obstacle to making a decision to outsource,
it should not be underestimated, the requirements must be documented
and the methods and integration with vendors defined.
- Outsourcing results in knowledge transfer to outside party
and vendors’ personnel training. There is an ever-present
pressure to retain functions perspective for outsourcing within
the company, even if it means increasing staff and training new
personnel. The most common argument is that there is always a
possibility of returning functions that have been outsourced back
into the company. Companies must carefully assess their business
knowledge and determine whether its spreading might compromise
companies’ practices and hinder achieving strategic goals.
Outsourcing is not just making a decision and enjoying the benefits
of it. It is an ongoing process of strategic analysis and vendors’
relations management. Company must clearly identify its strategic
goals, and decide whether outsourcing part of its functions will
be beneficial or it may hinder its strategic development. If you
are still not sure what option to choose, you may contact us,
and our analysts will definitely help you.
Denis Syropushchinsky is a Marketing Manager in Qulix Systems
- Offshore Outsourcing Software Development Company, located in
Minsk, Belarus, Eastern Europe. Our client-oriented approach and
effective offshore software development services are the things
that will help you to achieve your business goals. If you have
further questions about offshore outsourcing, please contact us.
Copyright 2005 Denis Syropushchinsky.
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