What Are the Disadvantages of Offshore Support?
Outsourcing allows companies to streamline operations and reduce overhead, and the appeal of hiring a highly trained individual living in India or the Philippines for less than US minimum wage can be enticing, but that benefit can be easily offset.
If you are considering outsourcing, it pays to do your research and carefully weigh the advantages against the disadvantages of outsourcing and make a decision based on those facts — not just the amount of money you will save on wages.
Consider these eleven disadvantages:
- Security risks: Security breaches and data integrity are serious concerns, and using an off-shore, third-party vendor increases your risk of exposing confidential company or client information.
- Hidden Costs: Signing contracts across international borders may have hidden costs. Do your research and ask questions to be clear of every cost that will be involved, including costs associated with making payments to the vendor.
- Quality Control Issues: If the vendor is providing services to multiple companies, they may lack the staffing required to provide the level of support your company requires. Mishandling a customer support issue can result in losing a key client.
- Problems with Infrastructure: Some countries have frequent wide-spread power outages and notoriously slow Internet speeds. Determine what contingencies the vendor has in place for power outages and what the capability of the ISP is in their area.
- Loss of Managerial Control: Stepping away from being fully in charge of what is happening with your support team and allowing the other company to run their business can potentially lead to mistakes with your clients who trust you.
- Tied to the Financial Well-Being of Another Company: You can’t control if your vendor has downsize or goes out of business because of their lack of capital, and the result would be you scrambling to provide the necessary coverage to your support desk with little to no notice.
- Your reputation: Your competitors may find ways to damage your reputation if it’s known you are outsourcing to another country, or clients may be unhappy that you are doing that.
- Political Instability: While we experience a seamless change in leadership during our presidential elections that is not the case in other countries. Countries experiencing economic instability frequently have political unrest as well, and that can undermine productivity.
- Hard to Reinforce Contracts: How will you handle resolving disputes with your vendor if they are not performing to your expectations? This can be a very delicate situation to resolve because cultural differences can impact your ability to resolve an issue. In some countries, voicing a difference of opinion is not acceptable, and your vendor may say “yes” simply because they don’t want to offend you, not that they are in agreement.
- Cultural/Societal Differences: Some countries celebrate more than 20 religious holidays a year, with many celebrations spanning several days, along with other national days that do not correspond with US holiday schedules. Will that vendor be able to provide coverage when you need it?
- Communication Issues: The learning curve for understanding the cultural differences in communication styles can be very steep, and misunderstandings along the way can undermine productivity or result in misunderstood instructions that damage client relationships.
The bottom line is that while outsourcing can be cost effective, you have to look at whether the disadvantages outweigh the advantages of outsourcing. If they do, then avoid outsourcing those operations.