Outsourcing offers a lot of opportunities and benefits to different businesses.
For example, cost reduction, access to experts worldwide, and flexibility to work on projects.
However, despite those opportunities, like in all business undertakings, outsourcing too, brings risks to a company.
Moreover, for a business to have a good strategy against those risks, one must also be aware of them.
In 2018 Deloitte launched a survey, and they found out the trends of risks many executives are afraid of when contracting outsourcing firms.
Cyber and Data Security
When a business outsources, it is inevitable not to share their data with the outsourcing company. Because of the nature of outsourcing firms, there’s a possibility sensitive company information is being shared in different third party systems, providers, and jurisdictions. Data breaches can cost a company a lot. That is why knowing more about the outsourcing firm’s security policy and cybersecurity, in general, is crucial. Moreover, a lot of companies now are also investing huge money in cybersecurity measures. In fact, the cybersecurity industry is expected to grow at 8.3% CAGR till 2021.
Who wants subpar quality services or products to stuff that they pay? Probably no one. Moreover, good quality service or product can make or break companies, especially with the competition in the market. Moreover, there are a lot of reasons that even if you got one of the best outsourcing firms out there, you might still get low-quality service or product. The reason might be because of poorly written contracts, organizational resistance, or lack of technical expertise on the side of the outsourcing firm.
Companies’ Legal and Regulatory Compliance
According to Deloitte, both laws and regulations have to be in place for businesses. However, in many cases, both also lag behind recent technological advancements. Laws and regulations tend to be more conservative and restrictive rather than helpful, Deloitte says.