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Outsourcing Risk Management: Loss of Visibility and Control

Outsourcing Risk Management

One of the biggest outsourcing risks is loss of visibility and control. Loss of visibility and control is a common fear with a potentially high price to pay: you hire people to do a job, communication is limited, management becomes far removed from the people who actually do the work…aaand the resulting product does not perform well, or the service provided did not achieve the results expected. Loss of control in outsourcing can mean very high costs with a sub-par product that was developed behind schedule.

What risk management techniques are best to prevent loss of control over your outsourcing venture?

A problem such as loss of visibility and control during outsourcing relationships can sometimes reduce the beneficial effects of outsourcing, but they can be easily prevented with a few risk management strategies. It can be prevented by building strong communication channels and outsourcing management awareness within your organization.

1. Pick a transparent vendor with proven risk management processes.

There are a large number of vendors out there, and most will claim that they have risk mitigation practices in place. While you’re choosing your strategic partner, make sure to ask them how they have managed similar problems before.

2. Make sure your entire team knows what outsourcing entails.

Outsourcing is not a quick-fix. It takes time, and while you may have chosen the best vendor in the world, the project is still at risk of failure if your team does not know how to cooperate and communicate with your new team of remote professionals. Make sure the entire team knows what is going on, what outsourcing will bring, and what changes to expect. Offer some training before the outsourcing venture begins. Above all, make sure your entire team is on-board, not just the management.

3. Use appropriate communication channels.

Even when everyone knows how the outsourcing relationship is likely to proceed, there is a chance that an e-mail will go unread, a memo will be missed etc. There are many communication channels available, e-mail is an obvious one, but incorporate communication through channels such as Skype and GoMeeting. Also make sure to share information by setting up a common VPN or using a custom cloud solution. Pick two or three things that will do best (you should be able to approximate what your company uses now and request that similar things are used by your vendor).

4. Maintain constant communication.

Once you’ve chosen your communication channels — make sure they stay active and are utilized frequently. Keep on top of what your new team is doing. Request updates and meetings with project managers.

5. Make sure to manage your outsourcing process.

Outsourcing is a relationship that needs work. It is not a quick-fix or a simple cost-reducer, but a partnership that does bring considerable benefits if managed correctly. You will need to take some time to manage your new outsourcing team, but also prepare your own staff for what outsourcing entails.

In sum, think about the possible risks your venture will face before entering into an outsourcing relationship, but also remain aware of these risks — and the appropriate risk management techniques — as you proceed with the partnership.

For more on risk mitigation and outsourcing, learn about the evolution of outsourcing to help better mitigate outsourcing risks.

Photo courtesy of bizior photography |

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