February 27, 2020  
 
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Outsourcing

 

Outsourcing Mistakes to Avoid

You can go overboard with outsourcing and get your business in a heap of trouble. If you're dabbling in outsourcing, here are some common small business outsourcing mistakes you'll want to avoid.

There are a lot of things that can go right in your relationship with an outsourced service provider.

However, there are a lot of things that can go wrong, too. Most outsourcing disasters can be avoided with a little upfront planning -- and a working knowledge of the outsourcing mistakes that are commonly made by small business owners.

  • Wrong motivation. There are a lot of good reasons to consider outsourcing. But if your primary motivation is to save a few bucks on labor, you could be in for a rough ride. The simple truth is that the decision to outsource involves many other factors in addition to labor costs.
  • Wrong provider. Along the same lines, you can't evaluate outsourcing providers on price alone. Cost counts -- but so do reliability, quality and expertise. In fact, the lowest priced provider usually isn't the one who is capable of delivering the right balance of cost and job quality.
  • Vague outcomes. When you enter into a relationship with an outsourcing provider, you need to be crystal clear about the outcomes you expect to receive for your investment. A failure to adequately articulate those outcomes in the contract and in your conversations with the provider will make it difficult to evaluate the project's success.
  • Outsourcing core business functions. Outsourcing works best when it offloads peripheral activities that distract you or your staff from your core business functions. If you approach outsourcing as a tool to perform functions that are vital to your mission, you will do a tremendous disservice to your company and to the people you rely on to achieve your strategic goals.
  • Lack of oversight. Unfortunately, small businesses sometimes outsource work and then fail to properly oversee its progress. Although you can't expect to exert a high amount of influence or control over an outsourced provider's work process, it's necessary for someone in your business to keep tabs on the provider's progress.
  • Single-source outsourcing. If you plan on outsourcing a significant chunk of your company's peripheral activities, you should consider spreading it out over several providers. Single-source outsourcing leaves your company vulnerable in the event that the provider goes out of business or fails to deliver quality outcomes.

Related Articles

Want to learn more about this topic? If so, you will enjoy these articles:

The Outsourcing Decision
Outsourcing Advice for Small Business Owners
Introduction to Outsourcing


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