Risks of Outsourcing

Risk of Outsourcing

In outsourcing, the most important advantage is that you can focus on your core competencies by transferring less significant processes to other companies. By concentrating on your sales performance, resources are saved that would otherwise be required to carry out less important tasks.

With this outsourcing advantage, you can not only focus more on your core competencies but also increase your flexibility. For companies that purchase certain services or products instead of creating them internally can adjust themselves much better to employment fluctuation.

This advantage of flexibility in outsourcing saves you fixed costs as the construction of an otherwise required infrastructure is avoided. Even a market exit would be easier for you because no high investments were made - for example in buildings, machinery or even personal.

Also, nothing makes a founder more afraid than to give his "baby" into the hands of other people. No matter what attitude you have to outsource, it is a phenomenon that has been increasingly popular for decades. Following are some risks points of outsourcing which are also important to know:

Moderate Commitment:

As the founder, you have an incredible motivation and energy, which naturally also goes over to your own employees. This allows an employee to work overtime, so that an urgent task is done, or he comes by itself in the free time on a good solution for a problem. For external service providers, this focus will never be available on the company's own project. Especially with part-time work and low-paid activities, one must simply hope to stand on top of the to-do list of its service provider.

For this reason, it is advisable to request feedback on the progress of the work every day, and generally, do not expect any superhuman performance.

Frequent Delays: The "Doppler effect":

The first rule, which one learns in cooperation with external service providers, seems unavoidable to apply to most outsourcing projects. It says that because of a variety of reasons and the different coincidences, a project always take twice as long as initially agreed. This is due to a variety of causes, e.g. Delay in communication, miss-communication, inaccuracies in execution, and so on. It is a problem that is actually difficult to avoid in new projects. Delays should be taken into account from the start.

Intellectual Property and Secrecy:

In many countries, there are strict laws for the protection of intellectual property and business secrets. And even if this is self-evident, these laws are not always respected by foreign companies. The resulting damage can often be no longer good and it is also quite expensive to lead a legal dispute abroad. You should be aware of this and do not abandon confidential company data or secret projects.

No Learning Effects, No Know-How:

Especially in the initial phase of a start-up, you often have little knowledge of how a process actually works, what is important to the customer, and where there is potential for optimization. If you now assign a task to a service provider immediately, you will never gain a direct insight into these processes. A good example here is e.g. Service requests from customers. These are often first given to a call center or a virtual assistant. The findings of the problems and concerns of one's own customers can be worth gold for a young company.

It is only by dealing with problems in one's own company that one can develop a long-term advance in the knowledge of its competitors. So best always check: Is this task important for my competitive advantage or not.

Access to The Knowledge of The Outsourcing Partner by The Customer Employees

Direct access to knowledge is, as far as the outsourcing partner allows, a simple way of access to knowledge. It is necessary to ensure that the relevant persons are available and willing to pass on their knowledge. The timing and process of the know-how transfer must be agreed by both parties.

Before deciding on one or more methods of know-how assurance, it should be made clear which value the existing know-how has for the company, how many employees this know-how is distributed, and how much the cost of the know-how and the expansion through training. In addition, the costs of securing know-how in the business case for the outsourcing project must be depicted.

A contractual anchoring of know-how assurance, including the rights and obligations of the outsourcing and receiving company, should always be considered.


But even if experts who deliver high-quality services are brought into the boat, one cannot help but communicate regularly, speak out, propose improvements, and monitor the work. So, it may be that you do not get as much free time by outsourcing as you might have expected it at the beginning. However, outsourcing can significantly reduce its own workload. In the end, the only way to increase their business is to provide employees with their own employees. All in all, if you will take care of some points, outsourcing is eventually beneficial for the company.


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