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My outsourcing blacklist

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According to some sales persons you should outsource (or even offshore) as much work as possible. Their rant usually goes something like this:

By offshoring you would be able to save a ton of money by making use of the workforce of low wage countries whose inhabitants are both intelligent and educated – and motivated ta boot! Nobody can ever get fired for doing that!

Well, this post presents a somewhat different attitude towards outsourcing. There are in fact things that you should never ever consider outsourcing…

Before diving into exactly what you shouldn’t outsource lets recap some of the known potential problems with outsourcing (especially offshoring) that you risk running into no matter what you outsource.

Language difficulties – everybody speaks english, right? Well yes – kind of. I my experience the english’es that is spoken in the different countries are not exactly the same english’es. This makes communication extra difficult. The problem is aggravated if neither country have english as their native language.

Time zone differences – the persons living in the other country might not be working (or would prefer not to be working) when the employees or customers of your company wants to get hold of them. If they are forced to work during inconvenient hours this might lead to loss of personnel and competence.

Cultural differences – differences in business ethics and work moral are for real (actually, these differences might sometimes work to your advantage). Also, the way we interpret any given situation is highly influenced by the culture we are part of. These differences often means that cooperation is complicated. Cultural difference is also a big reason behind the different levels of wages in different countries. So, the more you want to save by employing cheap labor the higher the risk of cultural differences.

Other companies have their own agendas – and that agenda is not to unselfishly help your company. As an example, outsourcing partners have been known to make up work to get more money.

Team members do not sit together. Sitting together is much better than video conferencing, or even worse communicating solely by email and phone. One way to handle this is to bring your offshored resources to your own location (commonly referred to as landing the resources), but that increases living costs and therefore the amount of money you can save by employing offshored resources.

And, to some people the most important thing of all: Outsourcing will most of the time (in roughly 90% of cases according to this study) lead to increased costs, and that doesn’t even take the potential new long-term problems that was created due to outsourcing into account! One such possible long-term effect is that outsourcing can lead to plummeting customer loyalty.

What not to outsource (the blacklist)

So, now we are getting to the heart of things. The list of stuff that you should not outsource is very simple. But if you follow those rules you will avoid the biggest mistakes of outsourcing.

  1. Do not outsource work that requires deep knowledge of your company’s business.
    To do this kind of work you will need communicate very much with your outsourcing partners, and that proves difficult given the known problems listed above. To read more about this you might want to take a look at this warning not to outsource coming from an outsourcing executive.
  2. Do not outsource work that is essential for your company’s business success.
    This will deplete your company’s essential competence, invite other players into the market and complicate what needs to stay simple and effective. It is comparable to giving away your competitive advantage.

If you outsource work that fulfils any of these criteria or even worse, work that fulfills both criteria (beware that if one is true often the other is true too) you might put your company – and your own job – at risk.

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  1. 2012/11/28 at 13:28

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