What Are the Main 3 Solutions to Outsourcing Problems?
Outsourcing may once have been considered a trend but that’s no longer the case. According to Deloitte, the global spend on outsourcing could reach $731 billion in 2023. It’s no surprise that such a rapidly growing industry has its challenges. If you’re considering an outsourcing partnership in the near future, it’s well worth knowing what the top 5 solutions to outsourcing problems are (and how they might fit in with your business).
While outsourcing can help to reduce overhead costs and improve productivity, it’s not uncommon for security risks, cultural barriers, and miscommunication to cause a few hiccups along the way.
The Top 5 Solutions to Outsourcing Problems
Below are the top 5 issues with outsourcing we’ve identified along with how best to combat them:
1. Choosing the Wrong Vendor
If you’re unsure about the background, skills, and track record of a potential outsourcing partner, you could face serious problems including:
- Higher than expected costs
- Miscommunication and misunderstandings
- Disruptions to workflow
- Major reductions in productivity
Many businesses will choose a less expensive outsourcing provider because it seems smarter to save a few bucks right from the beginning, but often these outsourcing companies don’t have the resources to help the business grow.
Solving the Problem
The rule of thumb is pretty simple on this one. Never choose an outsourcing vendor based solely on their pricing. As with most things in business (and in life) if it seems too good to be true, it probably is. A “more affordable” vendor can wind up costing you more because of scalability issues, resource limitations, and subpar service.
Rather than choosing a vendor based solely on their quoted price, consider your business’ unique requirements.
2. Settling on the Wrong Outsourcing Model
Your chosen outsourcing model should always be based on your business’ specific requirements, budget, scope, and deadlines. If you’re offered a one-size-fits-all solution, you’re barking up the wrong tree. The wrong outsourcing strategy is guaranteed to have a severe impact on the quality of your goods or services.
A fixed-priced outsourcing model, for instance, fixes the cost, the amount of time, and the resources at the time of the contract. When outsourcing tasks like customer support, this strategy is useful. It is less so for tasks like software development, which may need a more flexible approach.
The specifications for development processes are always changing, including those for materials, time, and resources. Additionally, the rigidity of the fixed-price model might make it difficult to adapt to these changes. As a result, it would either increase your expenses or lower the quality of the final output.
Solving the Problem
To make the best choice for your outsourcing needs, you need to thoroughly understand the various outsourcing models. There are three basic models.
Time and Material Model:
This model allows you to eliminate hidden costs by requiring you to only pay for time and supplies. This is best applied to production projects and works well with long-term partnerships.
In this model, the knowledge gap in your parent firm is filled by recruiting specialists or a talented team. It is less expensive than having a team on staff. You’ll have more control over your contracted crew and be able to integrate them a little better into your company culture.
Fixed Pricing Model:
With this outsourcing model, you include a list of requirements in addition to the budget and deadline. Because of the rigidity, outsourcing companies frequently sacrifice a few features in order to reach the deadline, or you could have to pay more in order to meet your expectations. For short-term projects with predetermined constraints, this strategy is ideal.
3. Language Barriers and Cultural Differences
When you contract with a third-party vendor in another country to handle your business operations, this is known as offshore outsourcing. With this type of outsourcing, language and cultural barriers can become a problem, hurting both the communication process and the ability to make decisions.
Employees that work remotely might not grasp your company’s culture or particular local vernacular. It may be difficult for both parties in such circumstances to comprehend and communicate instructions clearly.
For instance, American businesses who outsource customer support to certain Latin American countries can discover that dialect and language barriers make it difficult for customers to communicate.
In addition, your company’s work schedule might not always coincide with the festivals and national holidays of the outsourced countries. Ignoring these cultural nuances can sometimes interfere with your productivity, resulting in confusion and delays.
Solving the Problem
Make sure the outsourcing team receives has an affinity for your language, if you outsource customer support or other services where they must communicate with your clients. For example, you could outsource customer-facing services to Kosovo or the Philippines, where English language training is of the highest quality.
When determining work schedules, take into account regional festivals and cultural events. To help all stakeholders better understand one another, you can also offer diversity training for both your internal teams and your contracted personnel. They will feel more included as a result, strengthening their allegiance to the parent organization.
With the Right Partner, Solutions to Outsourcing Problems Aren’t as Challenging
If outsourcing is new to your business, you likely have some teething problems at first, which is why picking a trustworthy firm is crucial. A trustworthy outsourcing provider is one that has a substantial body of work demonstrating their experience, glowing client testimonials, and a committed staff of experts who will be there to guide you through every step.
At Noon Dalton, we’re standing by to help you answer any questions you might need to gain some more clarity on outsourcing and whether it’s the best fit for your business. Reach out to us today and we’ll get back to you in no time at all.