Friday, February 26, 2016

Entrepreneurs are also making mistakes while outsourcing

Outsourcing is one of the most powerful business practices an entrepreneur can use to achieve success. Aside from opening up a whole new range of opportunities by providing access to a wider selection of resources, outsourcing also cuts down on costs. So, why is not everyone doing it? The answer is simple – because it’s not as easy as everyone thinks it is, and it can be risky if done incorrectly. 

Entrepreneurs are also making mistakes while outsourcing, which can easily bring a business on its knees. Are you an entrepreneur and you think of outsourcing? Here is a list of common outsourcing mistakes, and how to avoid them.

Outsourcing Core Elements

One of the most common outsourcing mistakes is trying to outsource as much as possible, and while this may work very well at first in terms of helping cut down operational costs, it can prove to be very problematic on the long run. The problems start when core elements of your business get outsourced.
A business usually starts from a great idea and a vision, which is something you, the entrepreneur have, and those are the elements that will keep your business afloat and going in the right direction. Outsourcing key departments that steer the direction of your business, such as accounting, legal, or quality control, is never a good idea, as the parties you will outsource to will not have the same motivation to succeed as you, their only incentive being the financial one. The best approach is to always keep core elements in the house, and outsource the rest.

Outsourcing Quality and Security

A very common myth is that everything that is “made in China” is of poor quality, but here’s a fun fact: where it’s made has little to do with its quality – it’s where it is designed that matters. The best examples for this are Apple products. If you look closely at an iPhone, iPod or iPad, chances are you’ll see something among the lines of “Designed in California. Assembled in China” printed on them. 

This means that, even though the manufacturing and assembly was performed in a place that doesn’t have an impressive reputation; it was done following strict rules of design and quality developed by the team in California, which guarantees that the end product will indeed be of high quality. The same pattern applies to your business – you can outsource your workload to anywhere and anyone that has the necessary skills to get the job done, but make sure they do it by the specs you dictate, as that’s what has the final say in terms of quality.

Security is another major aspect to take into account, especially if you operate in the IT field and your product is software-based. Outsourcing the programming workload to a third party might be significantly cheaper than hiring in-house programmers to do everything, but you will still need in-house experts to oversee the progress and make sure no security holes are present.

Poor Team Management

Even though outsourcing basically means delegating tasks to others, it’s still your main task to make sure everyone is doing their job properly, and this is where a lot of entrepreneurs fail to rise to expectations.
A common mistake made by outsourcing is taking the financial aspect as the key element when picking the party the job will be outsourced to, but there are many other aspects that need to be taken into account. Aside from having the skills you require, you will need to keep in mind that the party you will outsource to will also need to interact with your in-house team to make things work, and that can prove to be quite tricky at times. 

Elements such as time zone difference or cultural differences all play a role in how two teams interact with each other, and you will need to asses these differences and find the best way to make things work, otherwise you might end up with two or more “camps” that each do a great job on their own, but fail to work as a collective.

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Hidden Costs

The main advantage of outsourcing is getting the job done at a lower cost. However, aside from the cost of the work itself, there are also some side costs to outsourcing that some entrepreneurs don’t take into consideration.
Setting up and implementing an effective outsourcing strategy can be costly, as you might need to train the team you will be outsourcing to, so they are familiar with your company’s work style.
 Legal arrangements regarding payment, non-disclosure agreements and other formalities you might need can also bump up the overall costs.Last but not least, there are the costs associated with the unfortunate event that the party cannot provide the services you need – you will need to find another party and start the whole process all over again.
Keep these common mistakes in mind when deciding to outsource, and you will be able to make the most out of it.

Author : Charles Goodwin and

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