How to Manage the Risks When Outsourcing Offshore
Increasing numbers of businesses are choosing to outsource their development overseas, for either smaller, defined projects or through a long-term outsourcing partnership model. The main reasons cited for outsourcing include a desire to increase company productivity and efficiency, while simultaneously lowering operating costs in an increasingly competitive economy.
But with outsourcing, whether overseas or locally, comes risks. Five major risks of outsourcing have been identified in recent years:
- Communication/cultural barriers
- Misunderstanding of requirements
- Quality assurance
- Concerns about intellectual property security
- Differences in company infrastructure and processes
Risks during outsourced project development are related to three factors: people, processes and policies.
By identifying where these risks can occur and taking steps early to mitigate them, your firm can enjoy an outsourcing relationship that is of high value to all parties involved. In the next section, we will describe what these risks are, and specific steps you can take to address them.
The Most Common Risks Encountered When Outsourcing
If you have concerns about outsourcing, you have plenty of company. When the management of several hundred companies in the United States was surveyed recently, they noted that their primary concerns included:
- Communication difficulties. This consistently came in as the #1 concern
- Quality of the development provided
- Lack of physical proximity to the development teams
- Concerns about the protection of intellectual property
