Why business outsourcing fails and how to avoid them

Outsourcing has become the go-to solution of many businesses when faced with cost-cutting dilemmas, workforce shortage, or a desire to widen the industry’s knowledge base. Although these are not the only reasons why many companies delve into business outsourcing, it’s proven to be an efficient economic means to improve work processes.

Yet, many business owners would agree that making the decision to outsource is more complicated than it seems. Companies need to scan for potential partners, conduct meetings with them, and filter out the best outsourcing provider. But your responsibility doesn’t stop here.

Watching out for possible failures in the outsourcing process is also a priority task. Therefore, this article lists three common reasons why outsourcing fails and some recommendations on how to prevent them.

 

1.     Rigid, inflexible contracts

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For most, if not all, aspects of your business outsourcing venture, a contract between the parties involved would be the defining standard. It’s wise to craft a contract that touches upon all possible concerns that you would have during the entire business partnership. However, contracts that are too rigid would not allow both parties to revise their business practices in cases of special or unforeseen circumstances.

The solution: Set up a regular schedule to revisit an existing contract, and agree to make revisions that would reflect both companies’ best interests.

 

2.     Setting unrealistic goals

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Business goals are your roadmap to success. High goal-setting can spike your employees’ motivation and drive productivity inside the workplace, which would be a winning situation for both managers and employees. However, setting unrealistic goals is a different matter altogether. Unrealistic goals are those that your business cannot achieve yet within a specified time frame. This can be influenced by several factors, such as unavailability of required equipment, short time frame, and unpredictable changes in the market.

The solution: With your outsourcing partner, discuss the highest attainable goals that your business partnership can set, and formulate a concrete strategy to fulfill them. Also consider intrinsic and extrinsic factors that could affect your business in the process of goal setting.

 

3.     Hiring the wrong outsourcing partner.

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Your outsourcing partner will be responsible for an integral part of your business. It’s therefore important to find an organization that you can trust, one that is led by value-laden and productive managers. Settling with the wrong organization can negatively impact your organization, sales, and revenues.

The solution: Carefully weigh the unique strengths and limitations of your prospective outsourcing provider before signing a deal with them. Design a scrutinizing process before finally choosing an outsourcing partner.

 

Indeed, making the decision to outsource is difficult. It requires thorough scrutiny, planning, and brainstorming. It’s best to be guided by sound business advice before you proceed to outsource a chunk of your business processes, and doing so can secure you a bright future in your chosen industry.

 

 

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