Risky Business Outsourcing

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The online environment doesn’t absolve business outsourcing from potential problems. There are some significant risks you need to be aware of, and some of them are exclusive to the Internet. I’m talking email failures, Internet disconnections, downed websites, virus attacks, you name it. Whatever the Internet has to throw at you as a casual user, it casts the same to you as an outsourcer.

So you’ll need to be a bit more diligent about opening file attachments. You’ll need a back-up ISP to ensure you can communicate at scheduled times and meet deadlines. If your service provider will work on a site that you host yourself, you’re going to need a back-up server and strong, current anti-virus software too.

Risks Shared Across the Industry

The Internet isn’t the only source of risks, however. You’re still vulnerable to risks shared across the entire industry even though you’ll outsource online. These nasty little buggers entail intellectual rights theft, contract breaches, data loss, bankruptcy, illness, death and those godforsaken natural disasters.

You’re equally vulnerable to risks associated with language barriers, ignored job proposals, poor service provider selection, a bad reputation, and of course, drawn out arbitrations on the losing end.

Plan ‘Around’ Risks

While you can’t always prevent risks, you can usually plan around them… sort of like what you do with your in-laws during holidays. (You can’t get away from those people, but you can plan escape routes, orchestrate fake emergency phone calls, things like that…) And so it is with business outsourcing.

A Good Read: International Journal of Globalisation and Small Business

You can’t always prevent someone from stealing your proprietary information, for example, but you can certainly seek damages in a court. You can’t physically force someone to commit to a contract either, but by making the right choices and having a few backup providers under your belt, you can minimize the impact of a no-show or deserter.

Regular backups will protect your data, and Grandma might let you borrow a swift fifty grand if need be. But when it comes to natural catastrophes, you’re pretty much left to the mercy of your nearest insurance policy.

Risks are Inevitable

Download a free risk assessment worksheet from our book, ‘Outsourcing Through RentACoder.’

Risks are an inevitable part of the business outsourcing process. Your role as an outsourcer is to minimize the damage these risks can do to your project, so take some time to plan ahead. Ask yourself, “What if [_____] happened,” and then design a course of action that will lessen its impact.

You could for example, minimize language barriers by working with service providers in your own country. You could increase your project’s sophistication by making it appealing to certified service providers only. You can even choose to with work the best of the best (exclusively) and consequently, obliterate the risk of arbitration and bad ratings — provided you play your cards right.

You’re a Risk Too

Yes, you play a role in risks too. Micromanagement, impatience, unprofessional behavior, and an inability to commit are potent project killers in their own right. If you’re prone to these types of behaviors, put outsourcing on the back burner for a while. Business outsourcing forms a relationship that needs tending to just like any other relationship. Current events can be found in our Outsourcing Risks News section.

External Resources:

1. The Insider’s Guide to Outsourcing Risks and Rewards
2. Managing the Risks of IT Outsourcing (Computer Weekly Professional)