Reports predict that the market share of the sourcing companies will grow by over 60% in 2018. It seems like everyone is trying to cut costs by establishing collaboration with international partners, but not everyone is considering the risks of the new business model.
Table of Content
- 1. Language Barriers
- 2. Different Time Zones
- 3. Cultural Differences
- 4. Geopolitical Risks
- 5. Poor Intellectual Property Protection
- 6. Choosing the Wrong Market
- 7. Poor Communication Infrastructure
- 8. Contrasting Internal Processes
- 9. Not Defining KPIs Clearly
- 10. Loss of Business Knowledge Internally
- 11. Calculate Costs Carefully
- 12. Failure to Deliver
- Conclusion
According to term paper writers specialised in HR, outsourcing can go wrong for multiple reasons: “There are dozens of risk factors to consider, but the most common barriers are immaturity of legal systems, unstable currencies, heightening geopolitical issues, and underdeveloped networks and infrastructure.”
In such circumstances, it is crucial to consider all the pros and cons of international partnerships. This post will show you 12 risks you have to consider while outsourcing overseas.
1. Language Barriers
English is the lingua franca of contemporary business. It’s a necessary precondition of outsourcing, but too many organisations and freelancers worldwide are really struggling with English proficiency. For instance, language learning is still at a shallow level in China. The problem is so acute that even non-native speakers can quickly go there and teach people English as a second language.2. Different Time Zones
Time zones may seem irrelevant in the era of Skype and instant messaging, but it actually burdens a lot of outsourcing projects globally. It’s just not practical to cooperate with people who live on the other side of the world. Take Australia and USA as an example: the capital of Canberra is 14 hours ahead of Washington, slowing down what would otherwise be considered routine business.3. Cultural Differences
Some industries are highly sensitive to cultural differences, which can jeopardise your outsourcing efforts. Let’s say that you are dealing with web design. In this case, you need to know that different cultures prefer different colours, symbols, and motives. Red is the colour of passion and energy in the western world, but it’s a symbol of death and grief in many African countries.4. Geopolitical Risks
Sometimes you’ll find tons of relevant outsourcing partners in one country, but you might face big issues due to geopolitical or regional risks. Countries such as India, Bangladesh, or Sri Lanka are often on the verge of conflict. This is a considerable threat for international projects, particularly ones that require a lot of time to complete.5. Poor Intellectual Property Protection
Working with a partner overseas, you have to analyse local laws and regulations to prevent problems concerning intellectual property. The worst thing that could happen is to successfully complete the project only to realise that your outsourcing partners are using products and services as their own.6. Choosing the Wrong Market
India is the most popular outsourcing market when it comes to information technologies, the blockchain, and software development. But would you really want someone from this country to be your ghostwriter? The answer is straightforward – No, you wouldn’t. Each market has its peculiarities, so you need to stick to the options that guarantee good results.7. Poor Communication Infrastructure
Outsourcing is impossible to handle without a stable Internet connection. However, some markets are really struggling with communication infrastructure. Before you choose a business partner abroad, you should explore all communication options and ensure backup solutions. For instance, you might want to avoid countries such as Libya, Indonesia, or Nigeria.8. Contrasting Internal Processes
Cultural and language barriers are not the only thing that separates international markets. On the contrary, many other features influence the quality of cooperation. Contrasting internal procedures are one of those features. Keep in mind that companies might have different administrative demands, so make sure to align processes to ensure smooth cooperation.9. Not Defining KPIs Clearly
A vast majority of outsourcing problems are caused by crucial vague performance indicators (KPIs). As a company that sets the rules, you need to state what you want clearly:- 10 Goals: What is the final objective?
- Milestones: Define your project step by step.
- Timing: How long does it all take?
- Payment: When and how much are you going to pay?
