Outsourcing Limitations - A Comprehensive Guide

Amy Pattinson
August 17, 2022
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5
 Mins Read

Outsourcing is contracting a business function or any specific business activity to specialized agencies. The company mostly outsourced the non-core areas such as sanitation, security, household, pantry, etc. are outsourced to the company. The company makes a formal arrangement with the agency. Before deciding to work with an outsourcing company, it’s important to learn the outsourcing limitations that your business might experience.

Invensis provides end-to-end customized back office BPO services across major business functions and industry verticals, ensuring on-time fulfillment of tasks.

Challenges of Outsourcing

Outsourcing is challenging to implement, and the down rate of outsourcing relationships stays high. It can be between 40 to 70%. The inherent conflict of enthusiasm in any outsourcing arrangement is at the heart of the problem. The vendor, however, wants to make a benefit. So manage that tension closely to ensure a successful outcome for both client and vendor.

In the next segment will see the outsourcing limitations

Limitation of Outsourcing

Although there are many conveniences to outsourcing, there are also definite disadvantages that a company must consider when considering outsourcing a business process or not? Here are some outsourcing limitations that any company should be attentive of:

1. Risk of Exposing Confidential Information

The risk of losing delicate data and the loss of privacy is perhaps the most significant drawback of outsourcing business processes. When outsourcing administration like HR or customer support, the third party has to be often disclosed confidential data that can easily be pinched or sent to the incorrect hands. Corporations take creative property quite seriously, so having goofproof measures and checking the matter of data loss and confidentiality contracts is needed when agreement outsourced deals.

2. Service Delivery

Once a business process is outsourced, comments and reporting occur weekly and sometimes daily. It may not be enough, especially if the delivery falls behind schedule or the quality is below expectations. Cannot implement measures as quickly as possible if the department operates in-house.

3. Instability of Outsource Companies

If an outsourcing company goes head, so does the absolute business department for your company, leading to a devastating conclusion.

4. Lack of Customer Focus

Outsourced companies usually work with a wide variety of clients and cater to the expertise needs of multiple organizations at a time. However, it can often result in underwhelming results on organization tasks as outsourced vendors may quickly lose track and focus.

5. You Lose Some Control

As you might hope, when you farm works out to external agencies or freelancers, you fall in control of how those works are supervised and executed. So long as you know and have faith in who you’ve hired, that shouldn’t be a huge issue – but you’ve got to tread carefully.

By outsourcing the business functionalities, the organization will have the expertise to accomplish the task and focus on the core activities. However, this benefit also comes with the cost of losing complete control over the functionalities of the outsourcing agency. So, it would be better to work within an efficient outsourcing agency to find the right balance in the organization.

6. A Threat to Security and Confidentiality

The inside news of the company may be leaked to a third party, and there are security issues. The leak of hypersensitive information may result in losses to the company and be an advantage to competitors.

7. Suppliers No Longer Support Your Business

This problem can arise in various circumstances, including when the supplier decides they no longer want to do business with you. The problem can be overcome by finding a new provider.

8. Less Consistency

One of the major benefits of hiring freelancers is that you need not have to feel concerned if you want to let them go. But the downside to this is a lack of consistency while you work with different people.

9. Lack of Internal Talent Development

When you outsource a specific functionality in your organization, you will not be able to focus on developing the skills of in-house employees. This would surely become a problem soon if you plan to bring back the function outsourced in-house. To overcome this issue, you will need to train in-house employees when you bring back the outsourced business functionalities to in-house.

10. Expensive

If you pay someone for their work, you would be paying more than it would have cost to do it on your own. The more experienced and efficient outsourcing service provider would be more expensive, yet it would be worthwhile to outsource your business functionalities for several important reasons.

First, the outcome may be better rather you could achieve on your own. Two, your ability to scale up-down without additional costs. Three, you will be able to gain experience in other functionalities.If you are considering outsourcing your business, I hope this article will be beneficial. But with all of these limitations, it's best to figure out which tasks are the most important to outsource.

Conclusion

Although it must be carefully analyzed cost-effective, off-shore outsourcing challenges, any business looking to outsource its nonessential business processes. These challenges may present themselves in the form of hidden costs, language and cultural issues, poor quality, and reduced customer focus. Therefore, outsourcing or remaining in-house is a key decision that can often make or break an organization.

Invensis is a reputed leader in empowering numerous global businesses and organizations through high quality back office BPO services that promote enhanced business efficiency and improved bottom-line.

About Invensis

Invensis Technologies is a leading global provider of IT-BPO services with a reputation for excellence. Our carrier-grade infrastructure and commitment to empowering clients around the world to achieve business transformation and growth through our services sets us apart from the competition. With over 5,000 staff and more than 22 years of experience, our company has been providing quality services since 2000.Invensis delivers intelligent contact center and back-office functions for businesses. Invensis is an ISO 9001 and 27001 certified organization and has achieved HIPAA compliance to provide high-quality and secured end-to-end outsourcing services. We have a strong base in the USA, Canada, Australia, UK, Ireland, Germany, and other countries serving over 200 clients. Innovative processes and technological solutions drive Invensis, and it offers full automation from design through implementation and continual development—all while ensuring data protection. Our solutions tailors to help businesses achieve their strategic goals and help them become industry leaders.

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Amy Pattinson

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