Avoid project failure: how to manage 8 common outsourcing risks in the New Year
January 8, 2014, by
Starting an outsourcing relationship is hard enough, but how do you make sure that it’s successful? After making the decision to use outsourcing as a strategy for cost reduction, innovation, and better software products, what are the most common risks that can set you project astray, and how can you manage them?
Risk #1: Loss of control and visibility over your process
One of the biggest fears CIOs experience is loss of visibility and control during their outsourcing venture. Communication problems and slow response may result in a less than desirable and costly product. Chances are your vendor doesn’t like this outcome either; they’d rather you were happy with your new custom software.
The key to facing your challenge is realizing that outsourcing is not a panacea and that the outsourcing relationship must be managed by your company and the vendor equally. Concentrate on improving communication with your outsourcing team, as well as make sure your in-house team understands what outsourcing entails. Here’s more on loss of control in outsourcing.
Risk #2: Zero cost effectiveness because of hidden costs
Outsourcing can be very cost effective, but it is not an end-all problems solution. To effectively manage your outsourcing relationship, you will still incur some cost, such as the salary of your project manager and the costs of transitioning. The best way to avoid this risk is to educate yourself about the potential hidden costs of your new venture, which will help you get a clear picture as to exactly what cost reduction your new venture will bring.
Risk #3: Crazy, upside down work hours
One of the problems working with a vendor halfway across the world is that your development team may not be working at the same time as your in-house team. This is particularly problematic if your project requires very close collaboration with your remote development team. Thankfully, due to the flexibility of many vendors, working hours should not be a problem. In many instances vendors are able to accommodate specific working hours, or shift them slightly to guarantee an overlap. Plus, there are plenty of global locations for outsourcing and it is worth exploring the benefits of each location, including the difference in time zones. Here you can download white papers to find out more about software development in Belarus and Ukraine.
Risk #4: Problems with language
Communication is crucial to achieve success in your outsourcing venture (especially if you’re trying to avoid Fear #1 in this list). One of the fears of many CIOs is that their communication will be limited by their development team’s ability to speak their language (like English). To avoid that, project leaders need to carefully select the country and their outsourcing vendor. Select a country that has a proven track record of teaching foreign languages you need, and select a vendor that guarantees that your remote team will be able to complete their project using your preferred language.
Risk #5: Will outsourcing bother my customers?
The last presidential elections in the US gave outsourcing a really bad name. In reality, outsourcing allows companies to be more competitive in the international market and most customers realize that. Here’s a more in-depth look on who benefits from outsourcing.
Risk #6: Product quality control
Once you get your project on track, you want to make sure that the end result is on par with your quality standards. The risk is that sometimes you receive a working product that has bugs the next day – once the vendor is no longer responsible. This can be averted by ensuring that your vendor follows the latest quality standards, as well as that there is a certified quality assurance specialist on your development team. See more on quality assurance certification here.
Risk #7: Security
If you’re not worried about product quality, you’re probably worried about data security. You want to make sure that your company’s data is secure, especially if your project involves working remotely with highly sensitive information. Selecting a reliable, certified vendor is crucial. Take a look at your vendor’s case studies and make sure that they worked with sensitive information before. Ask them about their security methods and how they’ve dealt with security problems in the past. If they don’t have a clear answer and examples to back them up, then they probably aren’t the greatest choice for your project.
Risk #8: Stable Business Partners
To avoid all the above problems, you want to find a stable business partner who is guaranteed to help if your project becomes complicated. Many CIOs are afraid that they will select a vendor, spend money on transitioning and introducing the new team to the project, only to find that their technology specialist has been assigned to another project. Or worse – there was a data breach. The list of horrors can go on and on… So how do you ensure that you select a stable business partner? Evaluate closely what your vendor offers. What is their outsourcing model? What is their team structure? Do they offer only fixed outsourcing services, or are they able to be flexible and act as a strong business partner? Here’s an article that describes the best outsourcing models for stable business partnerships.
Follow us on Twitter or LinkedIn to learn more about outsourcing risks and how to effectively manage them.
Photo via Graphicstock
Back to Company Blog
More on this Topic in our White-Paper
Outsourcing Operations During Political Instability: Current Business Climate in Ukraine and Beyond