What is outsourcing anyway?
Generally outsourcing means transferring a product or service responsibility to a third party. The goals of outsourcing are often cost savings, flexibility in resourcing, focusing in core business, easy access to knowledge and skills, avoiding unnecessary investment, improvements in time-to-market etc. When the full potential of outsourcing is realized, the company position in the competitive international environment is secured.
Issues related to outsourcing
Certain amount of skill and knowledge is required in order to realize the full benefits of outsourcing or large-scale subcontracting. Outsourcing may bring about a number of risk factors. The biggest problem often is that the customer is not able to clearly define the outsourcing objects. Thus the outsourcing partner delivering the goods or services is not able to deliver satisfactory results. Reasons for getting in this kind of situation can be communication failures, outsourcing process deficiencies and competence issues. Possible problems are often multiplied if the subcontractor or outsourcing partner is not domestic. In that case the issues may lie in different understanding concerning quality and responsibilities, different business cultures etc.
How to avoid the risk in outsourcing or subcontracting?
All problems are communication problems. There is certain truth in this generalization. You will need:
- Mutual and agreed understanding of the desired outcome
- Management of people and things
- Transparent follow-up and reporting