Top 5 outsourcing myths
Updated: May 14
You will lose control of your business. Standards, quality and brand image will suffer, the funding well will dry up, share price will tank, and all will be lost. The reality is, no, most likely not. Outsourcing is a competitive business and it is easy to discern the reliable, quality outsourcing partners from those that cut corners to win business but can’t hang onto their clients. Be sure to negotiate updates, reports, quality standards, communication channels and deliverables.
There is no reason why you should lose control or suffer from substandard work. Any outsourcing company that resists transparency and a methodology for you to maintain control is one to be avoided. If they won’t let you manage the team, outsource elsewhere.
You should only outsource to cut costs because that is the only advantage. The reality is, no, albeit cost savings is a big reason to consider outsourcing. Not all companies have the highly skilled staff on hand to take on new but temporary projects. And others don’t want to hire expensive contractors or staff if the expertise needed is not part of their core value proposition.
No company is an expert in all disciplines nor should they be. Do what you do best and hire expertise to do the other things you should not dedicate better-utilized resources towards.
Language and Culture are obstacles that will decrease efficiency. Oh yes, that does happen! We all have horror stories to share and I am not just talking about dealing with a call center in India where a rep names “James” keeps repeating the same question and same answer over and over. The fact is there are differences in these areas that can translate into inefficiencies in process, and worse. The reality is, these can easily be avoided with the proper research of the outsourcing company and good questioning during your initial calls. Observe their language skills, note if they understand the acronyms for your industry, and even see if they understand your jokes!
Look for outsourcing companies where the national education system is good, the work ethic is solid, there is an understanding of Western business culture and ideally, where English is universal among the population. This process will eliminate some geographical areas from your consideration, even an entire sub-continent. It is worth the effort to give this thought.
My data is at risk and I will be hacked and my data stolen. The reality is, probably not. How long would an outsourcing company be in business if they had a data breach? My guess, not as long as it takes to write this article. That said, you need to take precautions as you do with your data stored in the cloud, anywhere. Trillions of documents are outsourced every day without a problem. Most people aren’t aware that such documents include highly sensitive medical and legal information for millions of people. Hacking can occur anywhere, including the largest US retailers and the US Government.
But do take precautions when outsourcing sensitive tasks, even if the information only deals with internal product development. I am still uncomfortable sending data to Ukraine due to the ongoing, pervasive and aggressive hacking of their institutions and infrastructure by Russian hackers. But other than that, most outsourcing locations should be OK. Just be prudent and ask the right questions.
Outsourcing eliminates (American, English, Canadian, Australian, French, etc.) jobs and is bad for your local and national economy. The reality is, yes…and no and this myth is worthy of an entire post (and we will do that in the future). But for purposes of our short list, the reality is complicated. A company may well outsource a handful of IT and software development jobs, thereby avoiding hiring more expensive local contractors or employees. But that same company may not have hired them anyway and simply had to pass on the business opportunity completely if they had to pay local rates. Worse, without outsourcing of some disciplines, that company may be forced out of business and/or have to let go some of their remaining workforce. That is what we mean when we say it is complicated.
Years ago a Dartmouth research study found that for every US based job outsourced, two jobs are created. There is also the intangible value, in a larger global perspective, that creating jobs in less-developed countries brings a degree of hope, stability, prosperity and even peace to some regions of the world. We’ll leave that up to your own interpretation. But to answer the myth that outsourcing eliminates jobs, we say yes and no and it is complicated.