12 Pitfalls of Outsourcing—And How to Avoid Them

Guest Post
Thu, 19 Oct 2023 16:26:26 +0000
Hr, Operations, Staffing, Outsourcing

By Brett Farmiloe

To help you avoid common outsourcing pitfalls, we've gathered insights from CEOs and CTOs who share their wisdom on everything from only considering low-cost options to partnering with "jack-of-all-trades" agencies. Follow their advice to make your outsourcing process more effective and efficient.

Avoid these outsourcing pitfalls

1. Only considering low-cost options

"One common mistake that companies make when outsourcing is focusing solely on cost savings without considering other important factors. While cost reduction is often a significant motivation for outsourcing, it's important to recognize that quality, communication, cultural fit, and long-term strategic alignment are also crucial elements that can affect the success of an outsourcing relationship.

"To avoid this mistake, companies should conduct a comprehensive vendor evaluation. Instead of selecting an outsourcing partner solely based on the lowest cost, evaluate potential vendors, consider their track record, expertise, references, and ability to deliver on your specific requirements. In addition, establish clear and open lines of communication. Clearly define expectations, project scope, deliverables, and key performance indicators (KPIs) to ensure both parties are aligned."
—Melissa McMurdock, Online Marketing Help

2. Not clearly defining your expectations

"By far, the most common mistake I see companies make is not defining a clear enough vision for what they want their outsourcing partner to accomplish. They are vague, both with their requirements and their communication, which leads to wasted time, resources, and work that is unlikely to meet expectations given that the expectations haven't really been set.

"Solving this is done before you even start looking for an outsourcing partner—you need to take the time to document detailed project requirements, KPIs, and performance metrics. Use this as your guide in your cooperation."
—Onno Halsema, Contentoo

3. Going with generic placements

"When companies turn to third parties for their hiring needs, they risk landing generic placements—well-qualified workers without the passion and drive for one particular role. When outsourcing your hiring, it's key to choose a firm that understands your specific company. Knowing its culture, processes, internal hierarchies, and future potential are all key to landing the perfect placement.

"Also, big firms tend to prioritize big clients. If you're a small- or medium-sized business, consider a firm of similar size. They'll take the time to learn what makes your company unique."
—Travis Hann, Pender & Howe

4. Being drawn in by false promises

"Ever tried a new coffee shop, lured by their 'Quickest Coffee' sign, only to wait ages? That's how it felt with a courier choice when we were starting out. Drawn in by their 'super-fast deliveries' promise, we sent out big orders of our protective gear. But instead of the swift service, we got delays that nearly cost us top clients.

"The lesson? Just as you'd pick a reliable spot for your morning brew, pick your outsourcing partners carefully. A little research or a trial run can save a lot of time-wasting and cold coffee moments. And trust me, in business, no one enjoys waiting."
—Todd Saunders, BIG Safety

5. Not spending enough time vetting contractors

"When outsourcing, companies rarely spend enough time vetting their contractors. This can lead to poor quality of work or missed deadlines. To avoid this mistake, companies should take the time to research potential contractors and get feedback from previous customers before entering any agreement. It is important to clearly understand what services are expected and how payment will be handled."
—Scott Orn, Kruze Consulting

6. Avoiding outsourcing altogether

"It's not always clear what tasks can be managed internally, especially with the entrepreneurial mindset of being able to handle anything. In my experience, the biggest outsourcing mistake is avoiding outsourcing altogether—assuming that there's never a need for third-party assistance. Entrepreneurs often become so attached to the idea of doing everything themselves that they keep more tasks in-house than necessary.

"An honest evaluation of the ROI of your internal processes should clear up this misconception. For instance, looking back at all those weekend mornings spent on marketing can reveal the real impact doing it yourself is having on your business. In this case, it's likely that an advertising firm could accomplish more in less time, freeing you up for more important matters."
—Linn Atiyeh, Bemana

7. Not inquiring about the provider's internal workflows

"Companies will ask their outsourcing provider a ton of questions: who they are, what they do, and many more. However, one area that companies don't inquire about enough is how the provider operates, i.e., their internal workflows.

"Outsourcing means you're delegating and trusting the provider with important projects and tasks. It's crucial for you to know what the process pipeline for executing and managing the project will look like. To find out, you can ask a series of questions to get more clarity about the in-house functioning of your outsourcing provider:

1. Who are the people who will be directly involved with the project, and in what capacity?

2. What will be the frequency of project-related communication and updates?

3. How is project progress tracked and measured?

4. What steps are taken to ensure that deadlines are strictly adhered to?

"Questions like these can give you a better picture of the provider's project management capabilities."
—Shivani Maheshwari, WrittenlyHub

8. Not communicating with your outsourcing partner

"One mistake we made when outsourcing was not keeping an open and constant line of communication with the outsourcing partner. This led to confusion, which slowed down the project. Eventually, we set up simple ways to communicate, made sure everyone knew what to expect, and set up regular progress checks to make sure everyone was on the same page. Building trust also very important, so we frequently asked for comments and updates.

"It was also important to have a clear scope of work, well-defined project goals, and a thorough contract. In the end we had excellent results because we actively encouraged teamwork and communication. This experience demonstrated how important it is for outsourcing partnerships to have proactive involvement and alignment."
—Rene Delgado, The Indoor Golf Shop

9. Not cultivating a good relationship with the outsourcing team

"One common mistake companies make when outsourcing is not maintaining close contact with their outsourcing team. A good relationship with your outsourcing team is crucial for several reasons.

"First, it helps you understand the nature of the work being done by the outsourcer. If you're unaware of what your outsourcer is doing to produce their end product, it will be a challenge to assess their performance. Also, a good relationship allows for open discussions about progress and necessary adjustments. Last, if there's ever an issue with the work being done or a communication problem, a good relationship can help resolve these issues quickly, allowing both parties to get back on track."
—Gert Kulla, RedBat.Agency

10. Not assigning quality control measures

"One mistake companies make when outsourcing is not allocating a resource to verify the outcome of the outsourcing. This mistake can lead to various negative consequences that can affect the quality of the project, your relationship with the outsourcing partner, and the overall success of the initiative.

"Without a dedicated resource to verify the outsourced outcome, there might be a lack of quality-control measures in place, which can lead to subpar results. This can damage a company's reputation and erode customer trust. To avoid these pitfalls, assign an individual or a team with the responsibility of overseeing the outsourced project. This resource should clearly understand the project's goals, requirements, and desired outcomes."
—Sylvain Gamard, Acheteur de Maisons Armoricaines SARL

11. Partnering with "jack-of-all trades" agencies

"One common mistake companies often make when outsourcing is partnering with 'we do everything' types of agencies. It's easy to get swayed by the extensive list of services they offer. We've learned that these agencies might spread themselves too thin. Their vast scope often means they prioritize quantity over quality. The result? The projects may lack focus, expertise, and quality.

'How do you avoid falling into this trap? It's crucial to target agencies with a clear direction and well-defined services. These vendors deliver superior results because of their expertise in a specific domain. Opt for vendors who are confident in their niche, ensuring you get the best possible service tailored to your needs."
—Amar Ghose, ZenMaid

12. Skimping on the onboarding process

"Organizations often skimp on the onboarding process when working with outsourcing teams. The general assumption is that outsourcing teams have the experience and systems to seamlessly integrate with the hosts and don't need the same depth of orientation as in-house employees.

This, however, is a mistake that can have long-lasting adverse effects on the success of the outsourcing partnership. To prevent this, orient outsourcing teams with the company’s values and mission, communication tools, and specific project goals. Ensure they integrate with other employees and have the resources and training to understand the company's culture, processes, and expectations. By doing so, you're simply laying the foundation for team success."
—Karl Robinson, Logicata

About the Author

Post by: Brett Farmiloe

Brett Farmiloe is the founder and CEO of Featured, a platform where business leaders can answer questions related to their expertise and get published in articles featuring their insights.

Company: Featured
Website: www.featured.com