Reasons Why Outsourcing Sometimes Fails?

Outsourcing has become an integral part of today’s work culture. As small businesses grow, their managers have increasing needs for help in different types of areas like customer service, production, and IT support. The main reasons companies choose to outsource are to reduce the business operation cost and to offload the problems that allow them to focus on key business goals and planning.

Outsourcing can bring big advantages and benefits to the business but there are some significant risks and challenges like lack of communication, high expectations, low quality work, and conflicting interests that cause an outsourced project to fail. To avoid these issues we must have measures advantages and disadvantages of outsourcing, which helps to choose in a better way. 

Top Five Reasons Why Outsourcing Sometimes Fails:

1. Unrealistic Expectations
   One of the big reasons outsourcing fails is higher and unrealistic expectations. Sometimes managers choose the lowest price and expect more output than decided before, this squeezes the provider’s profit margins and they may look to recoup their losses in any way they can. At last, these things lead the outsourced project to failure.
2. Lack of Communication
   If organizations choose to outsource the project offshore, sometimes it will lead to a big issue due to lack of communication. It can occur due to cultural differences, language barriers, and time differences. It means both parties, service providers and clients, are not able to share necessary information actively with each other, and when it comes to time zone differences the organization and their employees must have to work extended hours which will increase the chances of tiredness, bad morale, and working mistakes. Overall, Poor communication can seriously damage the output of a project.

3. Conflicting Interests
   Sometimes companies choose to hire a service provider from unusual locations that create differences between the cultures or interests of the outsourcing company and the hiring company. Service providers might be unable to share their interests and understand the way of working of an outsourcing company that can lead an outsourced project to fail.

4. Poor Performance by Service Provider
   Organizations can easily monitor the work of their in-house employees to make sure that they are doing their work properly but when it comes to outsourcing a project their managers operate without direct inspection over the service provider and without checking the quality assurance process. These things give service providers a chance to cut corners in production and provide a poor quality output to the organization that can lead the project outsourcing failure.

5. Micromanaging the Service Provider
   When outsourcing a project, an organization should have selected the right service provider who has all the necessary skills to perform the work as defined in the contract, it will help managers to tell them what to do. But, Managers should believe that they have the right skills and experience to do so because micromanagement can lead to bad feelings on both sides, lower employee morale, loss of trust, and decreased productivity. So, micromanagement can directly impact the project outcome and will lead to outsourcing failure.

These were the 5 areas that managers usually struggle with when outsourcing a project. With some best practices like great planning, alignment, and a better communication process, project management, use of Remote communication, and project management tools, companies can survive with these pitfalls that lead outsourced projects to be successful.