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Top 5 Risks of Outsourcing and How to Avoid Them

Check out the list of common outsourcing risks and how to avoid them and find a reliable partner.

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Despite its popularity and annual investment growth, outsourcing is still a controversial solution. Although the interest of large companies in outsourcing has begun to outweigh the benefits of this method of software development, there are still some risks and concerns that inhibit the widespread adoption of outsourcing.

Common Risks of Outsourcing and How to Minimize Their Effect

Cooperation with dedicated teams allows you to reduce costs, gain access to a talent pool filled with experts of the required level, and as a result – a high-quality competitive product. And yet, the risks of outsourcing are alarming for companies. Probably the most obvious advice would be “find a reliable partner” but it’s not that simple. Here are some of the common risks that can be significantly mitigated to increase your chances of success.

1. Broken or Empty Promises

In a highly competitive market, everyone strives to stand out and show their best side. Outsourcing companies are no exception: each speaks of a high level of expertise and competence. The main outsourcing risks are that you can accidentally fall for a one-day scammer who disappears somewhere halfway through or an unreliable partner who will constantly push back deadlines and end up with a product of terrible quality.

How can you avoid this?

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2. Communication Issues

Communication is another of the risks of outsourcing that can become a serious problem. It can be considered an umbrella term for the language barrier, time zone, lack of face-to-face meetings, and even cultural differences issues. The danger lies in the fact that an incorrectly built communication system can lead to unjustified expectations and regular disputes on the project, caused by a misunderstanding of each other.

How to avoid miscommunication?

Business team digital device technology connecting concept

3. Hidden Costs

It is common knowledge that outsourcing can reduce costs and waste. However, this is where one of the risks of outsourcing hides. Literally hiding. At the initial stages of the discussion, you can easily calculate the approximate cost of services and your benefits, however, in the future it may turn out that some unexpected hardware and software upgrades, or troubleshooting, or charges for after-hours services not covered in the contract, nullify all the benefits.

How to stay on budget and keep out of this type of outsourcing risks?

4. Lost Control

Each company owner will say that no one knows his business better than himself and his employees. This is a logical conclusion because every day they are immersed in the activities of both their company and the entire industry. This is reflected not only in the company’s success but also in streamlined management processes. Losing this control is also among the risks of outsourcing. The point is not only that the internal development department is practically at arm’s length and it is easier to be involved in their work on the project, but also that outsourcing includes the delegation of tasks to those who are not connected with your business 24/7.

How to find the balance?

5. Inadequate Quality

Poor product quality is both a nightmare and one of the outsourcing risks. Striving to save as much as possible, companies choose the provider with the most favorable price, overlooking the reason for such a low cost of services. By going this route, you will get newbies who are unable to meet all your requirements, especially regarding the quality of the code.

What to do to avoid getting garbage in the code?

And yet, despite the existing IT outsourcing risks, steep growth in global IT outsourcing spending is predicted. Statista research shows a significant increase in investments in outsourcing from $66.52B in 2019 to $413.7B by 2021. Moreover, according to the National Outsourcing Association, 70% of organizations are going to increase their use of outsourcing, while 35% of them plan to do it significantly. The outsourcing provider market is regularly supplemented by new companies, but only reliable ones are ready to become a long-term partner and assistant in achieving business goals.

If you are ready to outsource your idea, Computools is open to cooperation and is ready to provide detailed consultation on this issue. Please, feel free to contact an expert of the company via the email or the form below.

Computools is a full-service software company that designs solutions to help companies meet the needs of tomorrow. Our clients represent a wide range of industries, including retail, finance, healthcare, consumer service and more.

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