How To Manage the Risks in Offshore Outsourcing Projects?

Offshore outsourcing has come to become an integral part of business processes across the world. However, just like with everything else, it is not without its share of risks and issues. While efficient offshore outsourcing can serve to cut overhead costs and bring more value to your business, if you are not careful enough... the same thing will serve to erode your profits.

This is why clients should understand the risks beforehand and set up mitigation procedures to make their offshore engagements more successful. Here are 3 types of risks that pose a challenge for offshore outsourcing projects and their subsequent mitigation methods:

Operational Risk
When the deliverables you receive from your service provider is poor quality and has too many errors, mistakes and defects. This is chiefly because the service provider fail to understand the core needs and requirements of the clients and their business model.

Preventing Operational Risks
Effective Knowledge Sharing – Before you start your offshore outsourcing project, make sure you invest some time to share knowledge and educate your service provider about your business model and your key requirements from the project. This reduces the chances of any problems on the grounds of unfamiliarity.

Define Metrics Clearly – Make sure your service provider understands your definition of quality! The SLA should detail key factors of 'quality' deliverables. Make sure you monitor the proceedings consistently and make sure the service provider is working in line with your requirements.

Don't Over-control or Under-Monitor – Controlling your service provider is like dictating terms of work to them and monitoring is the process where clients establish objectives and the service providers achieve the same by their own means.

Strategic Risk
When the service provider tries to cut corners or tries to make the clients pay for the providers' mistakes. This can be done by deliberate under performance or opportunistic renegotiation of contracts etc.

Preventing Strategic Risks

Include Transition Service Clause in the SLA
This ensures clients an additional year of service at the same costs. In case of any formidable situation, you would still have 12 months to find another service provider at the same rate.

Hire Multiple Service Provider
It follows the call of 'Don't put all your eggs in a single basket!' By not being completely reliant on a single service provider, you can make a switch easily and without any added costs.

Retain In House Staff
Offshore outsourcing doesn't mean you immediately lay-off your in house staff. Rather, it is a good idea to retain them. Not only can they keep a tab on the service provider and prevent them from playing any games but also you can immediately take back important tasks in case of any problems with the provider.

Monitor Diligently
Regular monitoring and checks will prevent service providers from taking any undue liberties and deliberately under-performing. Remember outsourcing work doesn't mean you can totally leave it at the hands of the service provider. Rather, if you want quality deliverables, you need to make sure the service providers are working efficiently.

Maneet Puri is the managing director of LeXolution IT Services, a renowned IT Services company based in India that provides a full range of KPO services to its clients. Some of the popular services offered by the company are data entry, data mining, internet research and virtual assistant services.