Outsourcing refers to an arrangement where one company contracts another one to get services that could also be provided internally by in-house employees. It involves one company involving a third party to get a function, process or service done (Wheelen & David, 2010). Non-core business processes can be outsourced to increase efficiency. There are major outsourcing mistakes that people make. They include: overestimating on the savings made on costs. Outsourcing in itself saves money but only when done with prior caution. Usually, companies expect an unrealistic cut on costs so much after outsourcing. Failing to plan an exit strategy is another mistake. Often companies rush into outsourcing, discuss everything but exit does not cross their minds thus fail to agree on important issues such as what should b be done if the outsourcing strategy fails to perform as expected. Sometimes companies jump into outsourcing too quickly. This is wrong for business because care should be taken; it should be gradual so that company outsources on a small service observes the results before going in deeper. Another common error in outsourcing is over depending on the contracted company after going all in. Back-up plans should be put in place just in case a contracted company fails to deliver what is agreed. Customers should not suffer any effect if a trusted contractor failed to deliver. Failure to communicate well to the outsourced company and to offer guideline is another error. Guidelines help to ensure quality and consistency of the contracted service or process. It also sets out expectation standards. Failure to have a performance checks mechanism where the services or process that is outsourced can be evaluated. Companies need to set up performance measure against which to compare actual performance (Wheelen & David, 2010). Ignoring the relationships with the customer is another error in outsourcing. It may lead to loss of customer; customers appreciate the relationship established over time. Switching them to another outsourced company may send them away.
Wheelen, Thomas L. & David J. (2010). Concepts in strategic management and business
policy (12the ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
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