Home
>
Strategic Planning
>
Making a Decision to Outsource: Strategic Constraints

Making a Decision to Outsource: Strategic Constraints

Many companies are reluctant to dive into outsourcing ocean because of various reasons of strategic nature. As far as strategic goals are touched upon, managers are concerned with the following issues:

- Risks and dangers of transferring too much managerial power to one partner. Companies fear to be too dependent on one offshore partner because its failure to meet commitments will definitely result in large losses for outsourcing company. To reduce such risks companies may diversify them, selecting several offshore vendors for partnering, in addition to thorough geopolitical analysis.

- Danger for senior management to become obsolete. When part of functions is transferred to offshore partner, it usually results in lay-offs. This can become a serious obstacle for companies willing to outsource, as they may face strong opposition from its own personnel and labor unions. In both cases indecisiveness and delays in acting may result in low effectiveness or even unprofitableness of outsourcing.

- Danger of becoming dependent from offshore provider. When considering outsourcing possibility, the companies should assess the consequences of vendor failure. The results of such analysis may vary greatly for different companies. To reduce possible risks of failure to carry out delivery schedules, companies shall work out legally binding agreements with tough conditions and heavy penalties.

- Protection and security of confidential information. Most mature offshore vendors enjoy more impressive security practices than internal ones of the outsourcing companies. However, the risk of commercial data theft or security breach significantly increases when working in international business. Although this issue rarely presents a serious obstacle to making a decision to outsource, it should not be underestimated, the requirements must be documented and the methods and integration with vendors defined.

- Outsourcing results in knowledge transfer to outside party and vendors' personnel training. There is an ever-present pressure to retain functions perspective for outsourcing within the company, even if it means increasing staff and training new personnel. The most common argument is that there is always a possibility of returning functions that have been outsourced back into the company. Companies must carefully assess their business knowledge and determine whether its spreading might compromise companies' practices and hinder achieving strategic goals.

Outsourcing is not just making a decision and enjoying the benefits of it. It is an ongoing process of strategic analysis and vendors' relations management. Company must clearly identify its strategic goals, and decide whether outsourcing part of its functions will be beneficial or it may hinder its strategic development. If you are still not sure what option to choose, you may contact us, and our analysts will definitely help you.

Denis Syropushchinsky is a Marketing Manager in qulix systems - offshore outsourcing software development company, located in Minsk, Belarus, Eastern Europe. Our client-oriented approach and effective offshore software development services are the things that will help you to achieve your business goals. If you have further questions about offshore outsourcing, please contact us. Copyright 2005 Denis Syropushchinsky. All rights reserved. This article may be freely reprinted on your websites. We only require that the article and the resource box at the bottom of each article remain unchanged.

shuttle to Midway Gilman .. Lockport Chicago limo O’Hare

In The News:

Hackers sometimes find ways to exploit iPhones, and Apple recently discovered a vulnerability in iOS that may have been exploited for over a year.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Lynx the robot dog from China is pushing boundaries of what autonomous mobile robots can achieve with a groundbreaking design and unique mobility.

A startup claims to have developed the world's first entirely artificial intelligence-designed and 3D-printed shoe, the brainchild of a 25-year-old.

Creating an email alias can help clean up your inbox by organizing emails based on purpose, like creating different aliases for shopping, newsletters and work.

A multipurpose robotic system promises to transform how items are stacked onto pallets, aiming to maximize space utilization and reduce shipping costs.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

The number of people affected by a UnitedHealth data breach in February 2024 was actually higher than previously reported and was the largest medical data breach in U.S. history.

A phishing campaign uses Google Calendar to schedule fake meeting invitations that appear legitimate, redirecting targets to phishing sites.

Toll road text scam: Fake messages claim unpaid fees, seek payment via fraudulent links. Kurt “CyberGuy" Knutsson says this scam is becoming increasingly sophisticated and widespread.

Kurt “CyberGuy" Knutsson says these steps ensure that your friends and family get to the exact moment you want them to see. Try it out and streamline your sharing experience.

Tech expert Kurt “CyberGuy" Knutsson offers tips on how to protect your identity: Be vigilant, monitor accounts, use smart security, know theft response.

Tech expert Kurt “CyberGuy" Knutsson says cybercriminals are exploiting iMessage phishing protection, tricking users to reactivate links.

It's hard to imagine life without in-flight Wi-Fi these days – but sky-high web surfing comes with its own set of privacy concerns. Here's how to protect yourself.

Over 400,000 cases of credit card fraud were reported in 2024 to the Federal Trade Commission. The CyberGuy explains how to protect against becoming another victim.

A nondescript metal box transforms into a fully functional electric motorcycle that blurs the line between vehicle and urban infrastructure.

Many apps unrelated to location still ask users for tracking permission, and Texas Attorney General Ken Paxton has filed a lawsuit seeking to end this alleged practice by Allstate.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Melody, the artificial intelligence-powered robot, is life-sized and represents a move toward creating robots that resemble people in appearance and interaction.

Here are five easy smartphone rules from the National Security Agency that you can follow to better protect your mobile device from hackers and scammers.

A U.S. robotics company has developed "Jennie," a robotic pet powered by artificial intelligence that's designed to comfort those facing mental health challenges.

Healthcare records for more than 184 million Americans were breached in 2024, but you can take steps to minimize that risk. Kurt the CyberGuy explains.

The Skyrider X1 from Rictor claims to be the "first amphibious flying passenger motorcycle," and it combines land and air travel in one sleek design.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Home inventory and restoration apps help itemize and track every item in your home in the event you have to make an insurance claim after a natural disaster.

Making a Decision to Outsource: Strategic Constraints

Strategic Planning