Myths of Outsourcing

Myths of Outsourcing

Despite its well-known advantages and successes, there are some myths attached to outsourcing. And although these myths are myths only, they have surely gotten in the way of many subcontracting operations.
Here are some common myths of outsourcing together with their explanation:

A job outsourced is a job lost

Outsourcing is about getting more final output with lower cost inputs. This leads to lower prices, which lead to higher standards of living and more jobs. Although outsourcing sends jobs overseas, it provides for enterprise growth, which can lead to domestic job growth.

The risks of outsourcing are too high

Contrary to multi-year deals, which may result in firms struggling to get out of constricting contracts, shorter contracts and flexible terms result in more productive, successful relationships. This shift in practice is called “smartsourcing” and it delivers a secure, mature and dynamic strategy that could help your business grow in no time.
Other risks, such as political instability and natural disasters should not be a problem if choosing the right outsourcing destinations.

Shared services are difficult to manage

Time-zone differences, travel costs and staff interaction may be challenging sometimes. But with a bit of effort, they can be managed and the benefits of outsourcing are worth trying to do this.

Outsourcing means loss of control, less flexibility and less dynamics

Companies that decide to outsource some of their activities, have as much control as they want on these activities, thanks to modern agreements. These agreements insure sufficient flexibility and dynamics. The key is in deciding what your company should focus on and what could be outsourced.

Outsourcing is all about cutting costs

Saving money is definitely one of the most important advantages of outsourcing. But it is not the only one. Other benefits, such as time and resources to focus on the core business, should be also considered when deciding to outsource certain projects.

The ROI of outsourcing hasn’t been proved

In fact, the ROI component of outsourcing has been shown again and again. Apart from reducing head count and employee overhead, other benefits such as faster time to market and improved quality of the finished product can achieve a ROI of over 400% in some cases.

Our first failure should be our last attempt

Outsourcing may not be a success from the very first time it is implemented, but that doesn’t mean it should be disregarded. It usually takes time for the partners to come to know each other’s needs and learn how to communicate better in order for the coordination to be more efficient. Experience is a key factor in a successful outsourcing project.

India is the best destination for IT outsourcing

India is a leader in IT outsourcing, whether we speak in terms of sheer volumes, number of providers, process maturity and so on. But it doesn’t mean that India is the best destination in each and every case.  It has its disadvantages, one of the most important ones being the fact that it is a farshore destination for European and US-based companies. For such companies, Eastern Europe is a good alternative to India. Some other things that should be taken into consideration when choosing the right outsourcing destination, are time-zone differences, physical infrastructure of the country, government regulations, political stability and cultural compatibility. From these points of view, there are many locations that may be a better choice than India.