Today more than ever, businesses turn to global outsourcing. In other words, they are outsourcing their operations to a third party in a foreign country.
This is often referred to as offshoring, but we’ve covered outsourcing vs. offshoring differences and similarities to the smallest of detail.
Either way, outsourcing to a company outside of your country does offer a lot of benefits. First and foremost, companies get a chance to lower their costs, but still have all the necessary departments they need.
The benefits of outsourcing are well-known and well-documented, especially by outsourcing companies (as expected).
But what are the downsides of global outsourcing? It surely can’t be that simple?
Of course not! There are two sides of the coin and we’re checking all the downsides of outsourcing globally. But instead of just naming the problem, we’ll tell you how to navigate the market, mitigate the risks and get the most out of your outsourced part of the business.
Let’s get started!
Which of the Following is Not an Advantage of Outsourcing?
Let’s play a little quiz. We’re going to ask one question and offer several possible answers. All you need to do is answer correctly! The question is simple:
Which of the following is not an advantage of outsourcing?
- Improved focus
- Search for excellence
- Cost reduction
If you’ve answered ‘d’, you’re right!
Global Outsourcing isn’t For You If You Value Confidentiality
One of the biggest worries for businesses that outsource their services to foreign companies is data breach.
To outsource your services, you need to share everything with your future partner. In order for outsourcing companies to get the job done, they need certain information about your business, you may not want to share lightly.
On the other hand, legitimate outsourcing companies keep your data safe and there’s nothing to worry about. But what happens if you find an outsourcing partner who isn’t trusted and there was no way for you to find that out before outsourcing?
They may sell your data to other businesses. When there is a breach, it’s most commonly:
- Customer data
- Financial record
- Intellectual property
- Trade secrets
This is a crossroad your business is at when you think about global outsourcing. On the one hand, you need to share your information. On the other hand, you know that it can be risky.
This could further spiral out of hand as you might lose control over your business and struggle to regain it. Although difficult to talk about, there’s always that risk. But if you’re thinking about outsourcing to a foreign country, you need to be aware of the downsides as well.
How to prevent your information from being stolen?
The easiest answer would be to not outsource. But that’s just not realistic. What will you do with your customer support, for example?
The solution to this is to find a reputable company. The best way to find an outsourcing partner abroad is through recommendation, checking their reviews, clients, portfolios and teams.
Outsourcing to Europe bears less risk than outsourcing to Asia, for example (not to say that there aren’t outsourcing companies in Asia that do a tremendous job). Culturally, for the US companies, it makes more sense to look for European partners, as they have a similar work culture and people from most of these countries speak very good English.
Quick Review of Other Answers
All the other answers are about the benefits of global outsourcing. For example, improved focus is an obvious one.
When you outsource a part of your business, that opens up a lot of space for your core team to focus on what matters. This can be finding new clients, developing new marketing strategies, and working on your product.
Or if you own an e-commerce business, you can broker deals with suppliers, increase your warehouse space, and work on improving delivery. In the meantime, your outsourcing partner covers sales and customer service.
Search for excellence is another benefit of global outsourcing. When you outsource a part of your business, you let a professional handle that part of your job. For instance, you can outsource content writing to a company that specializes in marketing and there’s no doubt that you’ll see results sooner than if you handled it in-house, without hiring a marketing team.
Cost reduction is another obvious benefit of outsourcing to another country. Countries across the world have different standards and companies offer salaries that match those standards. Therefore, when you outsource, you won’t pay as much for the services as you would in the US.
On the other hand, what you outsource, you don’t have to build in-house. You can have several foreign teams and still get the results and hit OKRs.
Lack of Control is a Downside of Global Outsourcing
A lot of businesses want to retain control of their company. When you outsource, you give away a part of that control. While that is a positive thing because you don’t have to worry about one major aspect of your business and you can focus on taking your company to the next level, this can be damaging too.
If you outsource to an unreliable company and hand them over the reins, sooner or later, you’ll see your numbers go down. It will take a lot of time before you recover from the loss of profit. Not only will you lose money, but you also cave contracts that you’ve signed with the outsourcing company and it will take quite some time before you retake that part of your business.
And the worse part is that you’re not back to square one. You’re far behind. Perhaps the outsourcing company was working with you for a few months. Now, you’ve no idea what’s going on in your business and you still have a team to build or to find another outsourcing partner.
However, after one bad experience, it will take some time before you can trust another company to work with you.
Ways to Retain Control Even When You Outsource
When you outsource, you want to have a company which is capable enough and knows how to do their job well.
However, there are different ways in which you can remain fully in control even when you hire a company abroad:
- Have A Person In-House Responsible for Global Outsourcing
- Schedule Monthly Calls
- Regular Reporting is Key
Have a Person In-House Responsible for Global Outsourcing
You need to have someone in your company who will take care of the entire resourcing. That role usually goes to someone in higher management – a person with experience and integrity.
They’ll be in charge of talking with the CEO of an outsourcing company, brokering deals, setting goals and making sure that everything goes smoothly.
Schedule Monthly Calls
One of the key aspects of outsourcing is to keep in touch with the outsourcing company and work together towards the common goals. Some outsourcing companies have developed systems when they talk to their clients and update them about what’s been done.
As a business that outsources, you can also decide on the communication flow. Having a monthly call will help you see what exactly has been done and based on the results, allow you to prepare a strategy for the upcoming period.
Also, you want to make sure that you’re on the same page when it comes to targets and short-term goals and let them do the rest. With regular monthly calls, you will be able to let them know about your plans as well and see if they’re in line with your direction. Things can easily change over just a few months.
It’s best if you check with them if they can do the tasks in advance and plan accordingly if something doesn’t fall under the scope of their work.
Regular Reporting is Key
Last but not least, you want to establish a system where you get regular reports from an outsourcing company. Have an agreement on what reports you want them to send you and communicate clearly.
Also, work on the format of these reports to prevent any back-and-forth communication if something you receive isn’t well-formatted or in the right document.
This will allow you to track the progress easily, without having to micromanage everything or without letting the outsourcing business do their job without any feedback to you.
At Morph Letting Go of Control is an Advantage
At Morph, we’ve established an onboarding process that allows us to understand your business well before we start working. Also, we send our reports regularly with everything we’ve achieved, so you’ll know the state of your business at all times.
We can always schedule calls to talk about customer services, room for improvement and offer our honest opinions and share advice that can help you make progress more quickly.
At no point do you want to let go and not know what’s going on. If you outsource, you also don’t want to micromanage everything, but let the professionals do their job.
We’ve found the perfect balance to keep you involved but also allow you not to worry about customer service, sales or anything else you want to hand over.
Cultural Differences Can Be Too Much
In theory, global outsourcing sounds wonderful. You’ll find a company abroad, agree with them on the direction and goals and let them do the job.
Keep in mind that the US work culture is slightly specific. Not everyone is willing to work as hard or have the same approach to work as people in the US.
Therefore, the country you outsource to also plays a role and sometimes, cultural differences can prevent you from working with your outsourcing partner for multiple years. While there are a lot of reasons to outsource to Serbia, there are several countries that are on top of the outsourcing lists (Serbia being one of them).
Culturally, there are differences, but they’ve adapted well to working with companies founded in the US. Make sure you do your research of the country first, before you start working with a specific company. This will help you understand what to expect and how to enter the talks with the business you like.
Time Zone Can Be a Problem
If you want your outsourcing partner to be active when you are, you want to look for an outsourcing company as closely as possible. But for the companies from the US, time difference will always be an issue when working with an outsourcing company.
If you can’t work simultaneously for eight hours, have at least a few overlapping hours, especially during the days when you have calls. Although there is a time difference, the majority of the companies will adapt to you, as they’re working with your customers. Just keep this in mind as another thing to overcome.
Language Barrier Prevents You for Providing Excellent Service
English is an international language, but not all employees in the outsourcing companies speak it well. Depending on the work they do, you may want to find a partner where employees speak near-native English.
This will help them talk to your clients, but to you as well. During meetings, there’s a lower chance of misunderstandings that could cause problems in the future.
When looking for an outsourcing company, look at their level of English and jump on an introductory call with them to see how it goes.
Outsourcing Companies May Go Bankrupt
You can never know what’s going to happen to outsourcing businesses. Most companies are stable with city-center offices, a high number of employees and a decent number of clients they serve.
But keep in mind that a company can go bankrupt. In the last few years, we’ve seen a lot of businesses going under and outsourcing companies are no exception.
This is something you can’t prevent from happening but you can prepare for it. Always have a plan B that describes what happens if the cooperation stops suddenly. This will allow you to spring back quickly and not suffer heavy financial losses.
Morph is a Reliable Company in the Global Outsourcing Network
Outsourcing isn’t easy and there are a lot of potential problems and risks that can occur. However, at Morph, we’ve minimized the risks for you, allowing you to outsource with a peace of mind.
Get in touch with our team and let us know what we can do to help you.