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Major Challenges of Outsourcing

Updated on August 22, 2010

Outsourcing Challenges

The idea of importing manpower and services from other countries has been around since the advent of international trade. However, the essence of outsourcing as known today allows the global workforce to be connected in many more ways. However, there are some outsourcing barriers that we have to confront before we can regard it as suitable to our business.

The payoffs of outsourcing are opposed by some hindrances. An important consideration is the economic and political condition of the state. Third world countries have a high chance to have unstable governments. Furthermore, the economic policies of these nations can switch from one political cycle to the next. Thus, there is a level of uncertainty that increases the risk for businesses who want to invest in outsourcing.

One more considerable obstacle is the language gap. Because of this challenge, not many nations are eligible for outsourcing. Developing nations that are well-versed in English like the Philippines and India are perfect candidates. Companies should look for subcontractors that totally complies with the skill-set that they require.

One more outsourcing barrier is a nation's current infrastructure. This involves the legal system, banking system infrastructure, and the telecommunications infrastructure that coordinates everything. Without a highly-developed infrastructure, the cost of subcontracting and the risks that are part of this kind of investment can be larger than predicted.

Once all the macro-challenges are considered, businesses will need to deal with other outsourcing challenges like cultural gaps, ability to integrate operations, training, and knowledge transfer. Operating with outsource partners requires companies to coordinate their local operation to conform with them.

Aside from all of these, there are also active challenges that requires consideration. Among these are security risks, human resource management, time-zone, management challenges, and many more.

Outsourcing is not for all. There are specific situations when outsourcing challenges outweigh the advantages. At the end of the day, you have to decide whether outsourcing is good for you or not.


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