The 7 Biggest Outsourcing Mistakes You Need to Avoid

Mistakes are costly — plain and simple. Being an entrepreneur, you can’t escape having a few hiccups here and there. That’s just part of the journey and one that teaches all of us to be better at what we do. However, avoiding big and disastrous mistakes rather than learning it the hard way is always the smarter route. Especially when we’re talking about a major business strategy like outsourcing.

You’ve probably heard mixed feedback and stories when it comes to outsourcing. There are companies who say they’ve tried and it was a complete disaster. While others share how it’s been a total game-changer for their organization.

What makes the difference?

It often boils down to how they approached outsourcing.

Outsourcing outcomes don’t have to feel like a roll of the dice. You don’t jump into a dark hole without knowing where you’ll land. Instead, it’s about making calculated moves, equipped with the right knowledge and a clear vision. You need the right strategy and insights to make informed decisions that steer clear of common pitfalls so your outsourcing solution becomes a strategic asset to your business, rather than a gamble.

Let’s break down the 7 biggest outsourcing mistakes companies make — so you can avoid it:

1. Outsourcing Too Early in the Business

Jumping into outsourcing before your business is truly ready is like trying to run before you can walk. Doing it too soon while your business is still finding its footing can do more harm than good. Timing isn’t just a factor but one of the basis for successful outsourcing.

So, how do you know when to engage in outsourcing and start benefiting from it? Look for these clear markers — your organizational structure is solid, you’ve pinpointed the exact role or tasks you need to outsource, and your operational processes are established. While an outsourcing partner brings a wealth of expertise and can fine-tune your operations, they can’t compensate for a shaky foundation. Starting strong ensures you leverage their strengths to the fullest to make sure your outsourcing operations become successful.

2. Unclear About What To Outsource

Don’t go into outsourcing without having a clear idea on what aspect of your business you will externally delegate. You can outsource a specific task or an entire role with a list of responsibilities. Either way, you need to draft a job description that doesn’t leave room for guesswork. Spell out the job objective, responsibilities, and must-have skills — check out these examples to get you started. Remember, clarity is your best friend here. All these will serve as a guide for your outsourcing provider so they have a solid reference to hire the right talent for your team.

Here’s one more thing to keep in mind. I sometimes encounter companies who unintentionally overdo or downplay their job descriptions. This can affect you in ways such as having an overpriced/underpriced outsourcing rate or hiring people who are a mismatch in their qualifications and career goals. So invest in the effort to get the job description right. At the same time, a seasoned outsourcing company can usually spot job misalignments early on and make the appropriate recommendations.

3. Not Having The Right Expectations

Avoid ambiguity when it comes to expectations. For the talent skills you require, the work standards you uphold, the way you communicate, and so on, make them clear and realistic to set everyone up for success.

But how do you ensure expectations are realistic? It’s all about grounding your aspirations in the context of your industry standards, understanding the market norms, and acknowledging the learning curve associated with any new role as outlined below:

• Benchmark Against Industry Standards. What are similar businesses expecting from their teams? Use this intel to calibrate your expectations without setting the bar impossibly high.
• Consult with Your Outsourcing Partner. Leverage their expertise. A seasoned outsourcing company has seen it all and can provide invaluable insights into what’s achievable. They can help you fine-tune your expectations to match the reality of the talent pool available.
• Emphasize Progress Over Perfection. Aim for continuous improvement rather than immediate excellence. Set milestones that allow for growth and learning, understanding that proficiency evolves over time whether you do it in-house or through outsourcing.

By marrying clarity with realism in your expectations, you set the stage for a more fruitful, less frustrating outsourcing experience. It’s about finding that sweet spot where your needs meet the practical capabilities of your outsourced team. This ensures a partnership that grows stronger over time.

4. Using Price as the Main Criteria

Being more cost-effective is one of the core reasons why companies outsource their business processes. However, it’s important to note that the lowest price can usually lead you down a pricier path in the long run. I’ve watched some companies fall into the trap of equating the cheapest option with the best value. But in the world of outsourcing — you often get what you pay for.

Instead of letting vendor prices mainly dictate your choice, you should also focus on the other important benefits of outsourcing. Look for value in the form of specialized skills, flexibility to achieve your objectives, enhanced capacity for your main operations, and agility to scale quickly. These benefits, along with price considerations, will offer more substantial returns on your investment over time.

5. Not Getting a Trusted Partner

What should you look for to ensure an outsourcing company is more than just a vendor, but a partner you can count on?

First, dive into their online presence and track record. A provider worth their salt will have positive online reviews, testimonials from satisfied clients, and case studies.

Next, assess their communication style — open, clear, and consistent communication is the backbone of any successful outsourcing relationship. Your potential partner should be as good at listening as they are at sharing their insights. Do they take the time to truly understand your business and what your goals are? Or do they focus on pitching their general services without investing the time needed to craft a custom solution for you?

Also, consider their expertise with your specific needs. For example, an outsourcing agency who focuses on catering to large corporations might not be the best partner for a small to medium-sized business. The needs, approach, and strategies of the two are totally different. If you’re an SME, work with an outsourcing company that focuses on building smaller teams with more versatile skills. They have more experience in navigating challenges you might particularly face and can deliver results more effectively.

Finally, gauge their commitment to your goals. A trusted partner sees your success as their success and is proactive in suggesting improvements, not just executing tasks.

In sum, you can prevent outsourcing mistakes by finding a partner that aligns with your values, understands your goals, and has the proven capability to deliver the quality you demand.

6. Lack of Communication

It’s a fact that once you hand off some of your business functions to a highly qualified outsourcing partner, you can entrust them to do the job. However, it’s important not to simply let things run on autopilot.

The reality is, while your offshore staff possess the skills and expertise, your involvement is the secret sauce that ensures everything comes together perfectly. Regular check-ins, be they weekly or monthly, adds intentionality to your communication and collaboration efforts. Kicking things off with more frequent meetings sets the tone for an open dialogue, ensuring everyone’s on the same page during those crucial early days. As you and your outsourcing partner find your rhythm and start seeing positive results from your combined efforts, you can eventually space these meetings out a bit more.

7. No Buy-in From Internal Team

Not having everyone in the organization aligned and on board with the direction of your company and its business strategies can hamper your outsourcing efforts. So the buy-in of your internal team is important. They need to see the outsourcing company as a partner and an extension of your operations, especially that they’ll be working together.

One way is showing your team the big picture. Highlight how the partnership not only elevates the company’s performance but adds value to their daily roles. With the outsourced team handling specific tasks, your internal team members get to zero in on what they do best, tackling more significant projects, and making an even bigger impact. It’s about crafting a collaborative ecosystem where everyone benefits, ensuring that outsourcing translates into a collective step towards efficiency and growth.

Conclusion

Outsourcing can greatly contribute to the sustainability and growth of your company. This is why many organizations have been using it and the global business process outsourcing market size is anticipated to reach USD 525.2 billion by 2030 and expand at a CAGR of 9.4% from 2023 to 2030, according to a study released by Grand View Research Inc. However, there are potential outsourcing mistakes that can seriously set you back. The solution lies in your ability to pinpoint the right moment to start, have a laser focus on what tasks to delegate, maintain realistic expectations, and select an outsourcing company that truly gets your vision.

As you contemplate your next steps, ask yourself: Are you ready to tackle outsourcing with a clear plan? How will you avoid the common traps and turn outsourcing as a win for your business?