Did you know that outsourcing can help businesses improve their service quality by up to 30%, according to a study conducted by IBM? 

 

A study by Deloitte found that 59% of businesses outsource to reduce costs, while 57% outsource to focus on their core business functions. Another survey by Deloitte found that 78% of the companies that outsource are satisfied with their outsourcing provider. 

 

So, it is undeniable that outsourcing brings many benefits. These include cost savings, access to specialized experts, better efficiency, scalability, and faster marketing. 

 

We are currently in a crisis where businesses are experiencing many challenges that impact their operations and profit. To stay competitive, they must find new ways to cut costs, increase flexibility, re-evaluate their business models, and implement new technologies and strategies. That being said, outsourcing plays a massive role in helping businesses overcome these difficulties. 

 

The benefits mentioned above, such as cost savings, allow businesses to avoid investing in additional infrastructure and equipment under financial pressure. Outsourcing also provides skills and expertise that might not be available in-house, which is extremely useful during hard times when it is often necessary to adopt new technologies to stay competitive. 

 

Similarly, outsourcing lets businesses focus on their core business operations, alleviating the efforts and time spent on secondary activities. Finally, the ability to market a product faster encompasses all the benefits outsourcing provides. Access to expertise, tools, and technologies enables businesses to speed up processes and deliver products to the market more quickly. 

 

However, hiring outsourcing companies has its challenges.

 

You think – I’ll hire an outsourcing company, agree on a price, delegate the project, and all will be good. What could go wrong? Well, a lot can go wrong.

 

For example, a finished product may not meet your standards, or something entirely different from the expected could be delivered. You could get into issues with the law; there could be unexpected expenses, delays, and additional fees. The list goes on. 

 

These are all issues that can occur in everyday environments. Still, when you have a sensitive period, such as worldwide economic turmoil, these setbacks can create many problems for your business. Therefore, in times of crisis, it is essential to focus on your core business operations to keep the wheel turning, which is why peripheral projects should not require effort and time on your part. 

 

Keeping that in mind, here are five critical mistakes that can happen in hiring outsourcing companies and how to avoid them. 

 

 

 

1. “It goes without saying. Or does it?”

You have not communicated well what you need from the outsourcing company and how you need them to do it. 

 

Companies make this common mistake when hiring outsourcing companies, which can significantly impact the project’s success. Clear communication is vital to outsourcing work. Otherwise, not establishing communication channels, project requirements, and expectations can lead to misunderstandings, errors, delays, and low-quality work. 

 

Example: Suppose you have hired an outsourcing company that offers eCommerce website development services. The outsourcing company is responsible for designing, developing, and testing the website. You have provided the outsourcing company with some basic guidelines on what the website should look like, its main functionalities, and performance expectations. But you have failed to give information on specific features such as user experience and branding details. 

 

As a result, the eCommerce website development company delivers a website that does not match your expectations, leading to a lack of engagement from potential clients. 

 

You must then invest additional time and resources to fix the issues, causing delays in the project timeline and impacting your ability to deliver the project on time.

 

How to avoid this?

 

• Do not assume that some things go without saying. Communicate clearly. Take the time to provide the outsourcing company with as much information and documentation as possible. Write guidelines, procedures, rules, and practices. Set clear goals, timelines, and budgets.

 

• Establish dedicated communication channels that will help you do regular check-ins and progress reports, ensure everyone is on the same page, and identify and solve early problems and doubts.

 

• Define a project plan which you will share with the outsourcing company. This plan should include phases, requirements, and deadlines; someone should regularly update it for any changes. 

 

Tip: Check out this tutorial on how to explain your needs better here.

 

 

 

2. “Buy cheap, buy twice.”

In times of crisis, businesses tend to cut costs by outsourcing to the lowest bidder. 

 

That’s a rookie mistake. Paying less at the start might cause you to spend a lot more during or after the process once issues emerge. Paying less can be a red flag. This could mean that the outsourcing company does not invest the necessary resources into their work or is cutting corners in some other way, such as the lack of experts in their team. 

 

While it is understandable that businesses must find ways to cut their expenses during a crisis, there are better ways to go than paying less for outsourcing. But, unfortunately, there are lots of issues that can occur. As a result, the worst is losing your reputation. And that hurts a lot. 

 

How to avoid this?

 

The criteria here should be a provider offering a fair price for their services and transparent pricing. When in doubt, consider the long-term benefits of employing an outsourcing company, such as improved efficiency, access to expertise and resources, and even cost-saving in the long run. 

 

 

 

3. “We are all one and the same”

No, we’re not. At least not when it comes to doing business and working habits. 

 

And yes, we’re talking about differences. You should take them into account. In most cases, both sides have the desire to end the project successfully. However, it would be best to consider that not all cultures communicate, work, and behave similarly. 

 

Language barriers can make it difficult for outsourcing providers to understand the requirements and expectations of the project entirely. For example, some cultures prioritize face-to-face communication and personal relationships, while others prefer written communication and a more formal work environment. In addition, some cultures value hierarchy and authority, while others prioritize collaboration and equality. 

 

Example: You are based in the United States but have hired an outsourcing company from another country to develop a custom eCommerce website. You assume that the outsourcing company works the same way as you without considering differences. For this reason, you don’t check in on the outsourcing team as much. As a result, the project is not ready in time because the outsourcing company you have chosen has a different work style and flow. You become frustrated and express your concerns to the company you hired to develop an eCommerce platform for you, which strains your relationship and leads to the loss of trust. 

 

How to avoid this?

 

• Invest in cultural education. If you decide to hire an outsourcing company based in a culture different from yours, take the time to do proper training to ensure that your staff and the outsourcing company are aligned on project requirements, processes, and expectations.

 

• Develop personal relationships. Building trust and mutual understanding can only be done if you try to get to know the team you are collaborating with. If you connect with them personally, it will be easier to overcome any cultural differences.

 

• Be open-minded. Remember that not everyone will think and work the same way as you. Because of this, you need to be flexible and embrace different communication and working styles.

 

• And last but not least – set clear protocols. Once you establish what is expected regarding procedures, communication, and deadlines, the project is more likely to be successful, and both parties will be happy with the outcome. 

 

To learn more about cross-cultural management, click here. 

 

 

 

4. “Jumping the gun.”

 

Believe it or not, many businesses do not research before hiring an outsourcing company. 

 

However, it is essential to do so when a crisis hits – you need a reliable partner that can adapt and deliver even in unexpected times. 

 

Why does this mistake happen?

 

One of the reasons is the lack of time. Businesses are often under pressure to finish a project as quickly as possible, leaving them with less time to research outsourcing companies. 

 

Also, when the priority is to pay as little as possible, exploring the outsourcing provider’s expertise, references, past projects, reputation, and skills takes a backseat.

 

Another reason is the lack of knowledge to evaluate and understand what should be looked for in a provider. 

 

Finally, relying too much on referrals from industry contracts or colleagues can take you away from researching and figuring out if the outsourcing company suits your needs.

How to avoid this?

 

• Take a look at their portfolio. Make sure that the outsourcing company not only has experience in general but that it has experience in the field you need. Check out if they did similar projects before.

 

• Pay attention to their reputation. You can do this by reading reviews and ratings online, seeking opinions from industry contacts and colleagues, or evaluating their portfolio.

 

• Organize interviews. You should conduct interviews to determine whether the outsourcing company’s team has the right skills and knowledge and if they are a cultural fit.

 

• Make sure they are operating according to industry standards. This refers to data protection, security risks, security measures, and backup procedures. 

 

Outsourcing is a big project, and every project needs a project manager. To discover what qualities top project managers must have, check out one of our previous blog posts here. 

 

 

 

5. “Universe will do its magic.”

 

Maybe you can’t figure it out from the title, but this section discusses a common and most dangerous mistake of neglecting data safety and security protocols. 

 

If you take safety lightly, this mistake can have serious consequences, such as data breaches, loss of sensitive information, and legal liabilities. In addition, your company’s entire reputation could be ruined, and your clients could lose your trust. 

 

Huge price for such a small mistake, right?

 

Example: Imagine hiring an eCommerce website development outsourcing company to build an online store. They do not have proper security measures such as firewalls, encryption, and secure data storage. At some point during the development process, the outsourcing company’s server is hacked, and attackers gain access to customer data, including names, addresses, and credit card details. 

 

This data breach is discovered only after the eCommerce website goes live and customers report fraudulent charges on their credit cards. Consequently, you get angry customers and the interference of authorities and legal issues. You are left to deal with lawsuits, regulatory fines, and forensic experts, losing money on your own.

 

Why does this happen?

Companies and agencies often assume that outsourcing companies are responsible for safety measures. Because of this, they completely forget about their security protocols. This can create an environment that is fit for data breaches. Sometimes, even after the security protocols have been established between the companies, you must monitor and do regular checkups on yourself and the outsourcing provider. 

 

How to avoid this?

 

• Before starting with the protocols, conduct a risk assessment. This is where you must identify possible safety issues, anticipate them and figure out ways to prevent them or successfully deal with them in case they occur.

 

• Establish clear data security procedures. These include data handling procedures, access controls, encryption, and incident response plans.

 

• Monitor. Make sure that the established rules are followed, pay attention to security risks, and talk about them to prevent and resolve them in time.

 

• Make sure the outsourcing company is working according to industry standards. These may vary, but those relevant to you and the project’s nature should be necessary. 

 

Check out Verizon’s 2022 report on data breaches here. 

 

 

 

Let’s wrap it up

 

There is no doubt that outsourcing can be highly beneficial since it can help you cut costs, gain access to new technologies, expertise, and just overall increase efficiency. 

 

In times of crisis, outsourcing can provide even more value by enabling businesses to remain agile, adapt quickly to changing market conditions, and reduce costs. But this is also when the risks of outsourcing mistakes can be magnified, and you must be even more careful in your decisions.

 

The most common mistakes are:

 

• The lack of communication.
• Choosing quantity over quality.
• Disregarding cultural differences.
• Not doing enough research beforehand.
• Neglecting data safety and security measures.

 

These mistakes can harm you more than you think – data breaches, legal consequences, project delays, and reputation damages all lead to additional costs. 

 

But don’t worry - You can avoid these mistakes if you take a strategic and well-thought-out approach to outsourcing. 

 

You can make your project successful by ensuring outsourcing providers can operate in crises, have disaster recovery processes, and are flexible. 

 

Be smart and take the time to choose the outsourcing partner for your needs.

 

To learn more about our strategic approach with clients, click here.