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Offshore Outsourcing - Risk Factors
Offshore outsourcing because of its numerous advantages attracts companies from all over the world. However it is commonplace to overestimate the advantages of offshore outsourcing and forget the risk factors behind it. Like all other activities this also involves risk. That's why it is important for managers to identify the risks access them and develop methods to overcome them. Risks may be divided into three groups – Geopolitical risks, Project risks, Strategic risks.
Geopolitical risks: - It is referred to host country. Most important factor is political stability and legal environment. Managers should carefully examine the latest political situation of the host country before making their decision. The political situation of most of the host countries is stable nowadays. That is why pre-outsourcing analysis first includes the legal factor. Here the main factors that have to be evaluated are intellectual assets privileges enforcement, industry laws, customs regime, license and "trade exit" conditions. Echelon of administration regulations is quite important as on on individual supply it can straightforwardly have an effect on assignment productivity, on the additional the dealer must exhibit its capability to fulfill through these rules. While analyzing geopolitical risk one should remember such things as – level of political stability in host country, legal environment, level of government regulations and support, requirements for vendors etc.
Project Risks: - This should be given the maximum priority. The success of the project depends on the dealing of the company. Careful approach and hard work are needed from both side, i.e. outsourcing company and offshore vendor, to manage the project risk. The company who has not off shored before needs this approach ardently.
Strategic goals: - Managers are concerned with the strategic policy of a company. They have to keep in mind -
Whether there is any danger in transfer excessively a lot decision-making authority to the hand of vendor. The possibility of risks in splitting the project between different offshore companies. Whether one should become too much dependant on offshore provider and how great the risk is in case of failure to deliver results to the company. How is delivery scheduled and what legal policies are there to lower delivery failure consequence?
It is the manager’s duty to check the protection of confidential information level; the security policies and facilities used by vendors; if any information thefts occurred in the past; how rigorous is employees revenue surrounded by the vendor; the hidden cost among the project; etc.
Most companies regard offshoring as an attractive way of saving money. But mistakes will happen and to minimize the impact a careful examination is needed because everyone is not sure whether he will be able to do it in best possible manner.
Quality Web Solutions is an IT offshore outsourcing company based in India provides web graphic logo Flash design services and also seo services.
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