Top Risks in Offshore Outsourcing

Offshore IT Outsourcing has enjoyed a steady growth of roughly 20% - 25% every year. While this business model has initially experienced resistance, communication and geopolitical risks are now considered of little consequence upon careful assessment.

When choosing the outsourcing location, you need to remember that this solution is not totally bereft of any risks. But such factors can be easily avoided when successfully addressed in order to ensure maximum productivity. Among the top 10 risks are identified below:

Operational Problems

Managing and running your business like a well-oiled machine is difficult as it is, coordinating and collaborating with an outsourced service provider from halfway across the globe definitely presents more challenge. Possible problems and issues can arise with the question on the integrity of the resources and systems, threats of availability, regulatory compliance and confidentiality of information. System failures or any unauthorized access to classified data can greatly jeopardize the company’s ability to make intelligent business decisions and conduct operations that are in compliance with industry regulations. At PhilWebServices, we ensure seamless collaboration with our clients, ensuring real-time coordination with your Dedicated IT staff and the Project Manager assigned to your account. We also place great value on our client's privacy, which is why we voluntarily sign confidentiality clauses to protect our clients as well as uphold our integrity as a world-class service provider.

Loss of Competencies

In majority of outsourcing arrangements, personnel as well as the IT assets of the company are transferred to the service provider, which often result to the transfer of knowledge. Hence, an organization runs the risk of losing core competencies and knowledge of its own operations and systems in certain relevant domains. This loss can, in turn, possibly compromise the company’s ability to manage and operate effectively without the assistance of a service provider.

Service Problems

While it is true that service providers are widely known as the experts on various fields, it is also possible that the quality of the services does not meet the company’s expectations and requirements. It is a major challenge in outsourcing to bridge the gap between actual service delivered and the standard that the company expects. PhilWebServices only employs seasoned IT professionals who possess the right qualifications to deliver quality services to our clients.

Unanticipated Costs

Possible problems and complications can arise when the scope of the outsourcing service is not properly planned or defined. Organizations can possibly incur some unforeseen costs that are related to management and transition, which can drastically affect the profitability of the organization’s outsourcing decision.

To be able to effectively overcome or avoid such drawbacks, any outsourcing agreement should be fundamentally based on shared principles that should be established at the outset of the business transaction. PhilWebServices fully understands these dilemmas and acknowledges the high level of trust it requires for companies to outsource a business function to a third party. For these very reasons, we take extraordinary steps of assessing and determining the specific requirements of our clients, as well as conduct extensive discussions as to how outsourcing benefits and advantages can be further maximized as well as significantly reduced, if not eliminate the drawbacks.

The preceding section provides a discussion on the outsourcing model and the important factors that determine the foundation and development of this model.

Data Security/Protection

Another risk of IT organization that you to consider is the robustness of the security practices and if your service provider can meet your security requirements. While most IT companies have an impressive security practices, the risk of intellectual property breaches needs to be completely addressed.