5 Steps to Reduce Global Outsourcing Risk

‘Scope In’ The Appropriate Amount of Scale, and Then Add More Incorporate scalability, to all aspects of the project, if you want to deliver cost-savings and support business agility in a changing market. After 30 years of providing successful outsourcing services, Miratech knows that the strategies outlined below work. They were thoroughly tested and highly effective even throughout 2020, when organizations had to transition to a fully remote work model. Miratech was able to do this seamlessly in all our engagements, regardless of location. It is not a quick-fix or a simple cost-reducer, but a partnership that does bring considerable benefits if managed correctly. You will need to take some time to manage your new outsourcing team, but also prepare your own staff for what outsourcing entails.

IT outsourcing is a well-known and widespread practice of hiring a third-party vendor to handle a whole or a part of the development project otherwise managed by an in-house team. Vendors are taking on roles as strategic partners whose business fortunes are intimately tied to the business success of the enterprises that outsource their key business processes to them. We have the capability and bandwidth to ramp up the service requirements and increase the number of resources in the project as and when the project demands.

Service degradation indicated that the outsourcing company’s service after the outsourcing decision is not as good as the firm before outsourcing. Such downgrade is caused by interdependence of activities, the supplier unfamiliar with the outsourcing firm, the size of supplier, supplier’s financial instability, measurement issue, and task complexity. Earl argued that the quality of service largely depends on the supplier’s size, financial stability, and expertise. Since the size and stability are the characteristics of determining is the supplier a qualified supplier or not, the supplier size and supplier’s stability are referred to as agent problem. This statement is to clarify that outsourcing does not need to be limited to products or services. Flatworld Solutions has been a pioneer in providing quality risk analytics services and a series of other business analytics services to clients around the globe.

How to Choose Outsourcing Model

Logistics Strong logistics expertise, high-quality software solutions, and end-to-end development. Identify strategic projects and ensure that on these projects your strategic vendor is directly connected to business stakeholders. Segment future projects into high and low-end work , segmenting your providers the same way.

• In this section we provide some suggestions and recommendations for researchers and practitioners.
• Moreover, this kind of loss can have a negative impact on the future of the outsourcing firm.
• It’s been said that data is the new currency for businesses, and there’s certainly a lot of potential to leverage analytics for business gain.

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• Find out how enterprises are using DSaaS in their analytics pipeline.

So even though it was a business continuity measure then, outsourcing is still in practice. The world’s largest enterprises use NETSCOUT to manage and protect their digital ecosystems. Access Rapid7’s expert cloud security resource hub and elevate the way you consider cloud security. Revenues and Profits strive to provide the latest information from tech, business, and financial world.

Hence, unexpected transition and management cost and its risk factors can be identified as Agent Problem, Operational Risks, and Intrinsic Risk of Location. We also call for a paper on the education field to discuss the future needs for human resources. Now, society is starting to use robots to help humans live better, but it already showed the challenge of the public unfamiliar with the robots and their working mechanism. Or is this the service supplier’s obligation to make robots more user-friendly? We call for more papers on the topic of cloud computing and service automation in outsourcing. In addition, we call for more empirical studies to reveal the pros and cons of cloud computing and service automation.

A compelling guide: How to timely manage IT outsourcing risks

In this way you will avoid non-abidance of the claimed requirements by someone of the project team. If you have any problems with your access, contact our customer services team. But policies and standards are not the only way to protect your data and assets. Non-disclosure agreements are also a great way to legally ensure you won’t end up with stolen information, data leaks, or other cybercrimes.

We also recommend that executives pay attention to the supplier’s moral value and construct a method to gain more control over the company’s core intangible assets. It is the main offshore outsourcing risk, https://globalcloudteam.com/ which can drastically influence the success of the future outsourcing relationship. You should make sure that you provide the outsourcing company with all the requirements for your future project.

problems of outsourcing and ways how to solve them

All you need to do is check regularly, pay close attention to the details, and you’ll be working towards risk mitigation. When you’re outsourcing to any service organization, you completely or partially expose your business assets to an outsider. This becomes an even bigger setback if your outsourcing partner is in a different time zone because, with each ticking second of unsolved problems, you’re losing money.

On the other hand, loss of confidential information is the risk of transferring to a new system which indicated this risk tie to information leakage. The risk of lower employee productivity can interpret from two aspects. One of the risk is that the employee’s productivity is lower due to the working process has changed due to the firm’s recent outsourcing decision.

Experts Name the Top 10 Problems of Outsourcing

Many organizations have also burned their fingers by embarking on big data programs that failed to ensure users have high-quality data and can easily discover data. Such data swamps can be avoided by thoughtful, architectural decisions upfront in the program. By providing industry best practices and ways to combine optimized technologies, big data outsourcing providers help clientele ensure their investments demonstrate high ROI, Balakrishnan said. Aron et al. explained that the agent big data outsourcing problem usually indicated that the supplier’s outcome did not meet the outsourced firm’s expectation and/or the outsourced firm’s lack of resources to identify an unqualified supplier. In other words, the outsourced firm felt that they did not get what they paid for. For computers and robots, it is hard to tell whether they “work hard enough.” However, based on the supplier’s performance, the outsourced firm can determine if the service that the supplier provided is over-price or not.

Cloud computing outsourcing allows the firm to enjoy flexibility at the level of allocating resources. The firm is buying the resource based on real-time demand instead of pre-purchased hardware and software. The charming part of such flexibility is that the firm does not need to pay additional costs for idle digital storage space . According to Dolgui and Proth, practitioners such as managers were more likely to confuse the concept of outsourcing with sub-contracting. Sub-contracting is the firm contract-out partial works to another firm that contain specific resources and/or skills to provide better task results.

Outsourcing Risk Management: Loss of Visibility and Control

Even when an error occurs, the firm can invite the government and the public to inspect the supplier firm to fix the issue. In addition to capability, researchers found that the moral standard is an underestimated factor. Especially now, moral can be the factor that increases opportunity risk. Kakabadse and Kakabadse concluded that outsourcing in the 2000s was more focused on cost management and functional specialization, and differentiation strategy and market response capability would become of the future. The outsourcing cost of data storage, e-commerce, and website setup was drastically reduced. Small and Medium-sized enterprises tend to seek contract-out to the third party by paying the monthly flat fee.

Outsourcing only works for low-level analytics

Medium-risk providers may be required to answer a security practices questionnaire and only be investigated in more detail if their answers raised concerns. High-risk providers might be required to submit a third-party audit report or undergo a detailed assessment by your internal security group. Develop your own customized solutions to limit the reliance on external software packages that may have functional, security, or other risks. In it, we provide solutions to the potential pitfalls businesses face when outsourcing IT in the current landscape. Quality data centers already have the necessary resources in place to handle expansion.

Problem #6: Contractual and Legal Processes

Cannon also suggested that the cloud computing designer should focus more on optimizing data privacy protection. Also, the outsourcing firm tends to focus on cost reduction of R&D and systems innovation. The supplier tends to just install and run new systems instead of takeover the existing assets. Moreover, the outsourcing firm was transferred their habit of contract-out the entire complex operation to one supplier to assign multiple suppliers based on the professional requirements of each area.

Con: Cost vs. value trade-offs

This, in turn, has spawned a new demand in the market for analytics services. While some data analytics functions are universal, others can be specific to certain sectors such as healthcare and financial services. Finding an outsourcing partner that has deep industry expertise can be a huge competitive plus.

We have the capability to work on the latest tools and technologies and deliver error-free services. We know the importance of having good infrastructure while delivering the best quality risk analytics services. We have access to the best in terms of uninterrupted networks, the latest tools, and international-standard office spaces.

In this chapter, we give an overview to the benefits and disadvantages of outsourcing. We also discuss recent trends in outsourcing; in particular, with the benefit of technology development, robots are starting to join in outsourcing. A problem such as loss of visibility and control during outsourcing relationships can sometimes reduce the beneficial effects of outsourcing, but they can be easily prevented with a few risk management strategies. It can be prevented by building strong communication channels and outsourcing management awareness within your organization. At the earliest stages of the development process, declare your requirements regarding cyber attack protection. Developed software or application shouldn’t in any way be exposed to vulnerabilities of the hackers’ breaches.