Why Outsourcing Fails and How to Avoid It

Posted on May 17, 2013 by in Software Development

Cutting costs is the main reason in which organisations will outsource their operations. If cutting costs is not the main objective, then there would not be many reasons left to outsource. Yet, there is still room for improvement as far as reduction in cost goes. A reason for this and in the failure of outsourcing is that the planning is not carried out carefully.. Through poor planning, an organisation is more likely to fail in their offshore operations since there is a certain degree of risk involved in outsourcing.

The failures

Poor implementation of any existing plans that are in place - which is likely to be a result of poorly managed strategies, can cause a potentially successful outsourcing project to go the wrong direction. Unfortunately, a lot of organisations are not committed to providing the time required to generate a sound plan and execute the project. They also assume that they already have the needed internal resources to implement an outsourcing project.

Through not evaluating the possible risks, an organisation can encounter issues that may include problems with suppliers and labour. In the case of supplier issues, an organisation has to make sure they are doing business with a supplier that will produce the needed project in a timely and cost-effective manner. It is also important to find a supplier who is easy to do business with. A corporation must also evaluate the competition to ensure that they have an edge in the industry and that they can secure the most valuable suppliers.

There are valuable resources that can make outsourcing a success. However, when proper research is not done and assumptions are made, outsourcing can fail and cause an organisation more headaches than if they had never decided to proceed with the project.

How to achieve success

It is simple to say that in order for an organisation to succeed in outsourcing, the organization must do the complete opposite of what causes other corporations to fail. Where around 50% of outsourcing endeavours fail, it is fair to say that 50% of these projects succeed. So here we are dealing with a 50/50 chance of it working, but in order for that to happen a corporation must set aside the time and the personnel to put the project in motion.

How is this done? It is through proper planning that and detailed research of prospective suppliers and vendors. It is also ensuring that they have sufficient resources. It is not essential as to how many people will be working on the task but the quality and timeliness in which they perform which should be the focus. Also evaluate the competition out there in order to get an edge.

Obviously, it is through creating a plan and implementing that plan with various steps that will put your organisation in the 50% that succeeds in outsourcing operations. Many organisations will do a shoddy job, claiming they do not have the time and manpower, but efficient workers will ensure that the time and manpower is made available.

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  • Author

    Bhauvik Tripathi

    specialises in Enterprise Software Development and Software Product Development. He has successfully helped many businesses around the world to develop Software products and help them build their business around it. He is the founder of Shivam Technologies, an Australian based technology company with experience in Software Development, Web Design and Internet Marketing.

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