Top outsourcing risks
Putting development of your product or any other aspect of technology in the hands of a third party is certainly a risky proposition. To properly mitigate the risks of outsourcing one needs to understand the outsourcing landscape quite well. The top offshore outsourcing risks fall in several main categories. There is much to be said about each of the categories; I am planning to add more substance / clarifications /examples to each of the bullets below, as well as some ideas on risk mitigation. For now, here is the high level list:
Geopolitical
- Government regulations, on the both sides of the equation
- Political stability
- Legal maturity
Security
Internal – Organization
- Cost-reduction expectations
- Organizational commitment
- Organizational maturity – multiple aspect of being ready to outsource
- Loss of team support / respect / relationships with the team
- Loss of team spirit / internal unease
- Loss of key personnel / technology and business knowledge loss
- Decrease in team’s productivity / commitment
- Career impact
- Lifestyle impact
Vendor capabilities
- Financial Stability
- Organizational maturity
- Organizational commitment
- Infrastructure (macro / micro view)
- Technical capabilities
- Ability to deliver
- Personnel turnover
Joint responsibilities
- Process confluence
- Scope management
- Geographical dispersion
- Cultural differences
- Knowledge transfer
- Communications
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About
The price one pays for pursuing any profession or calling is an intimate knowledge of its ugly side. [James Baldwin]
In IT outsourcing one does not need to go too far to get ultimately familiar with its ugly side. However, despite all disappointments and failures I honestly believe in offshore capacity and its positive impact on the industry. I’ve seen enough success stories to continue using offshore resources myself and recommend it to others. Offshore outsourcing is one of most powerful weapons in technical leaders arsenal. And like any other powerful weapon it requires careful handling and great deal of knowledge in its use and application. Ugly enough even slight mistakes in its utilization could cost companies enormous pain and expense and technical leaders their reputation and career.
The goal of this blog is to bring to everyone involved in offshore outsourcing my 5 T’s – Thoughts, Tools, Tips, Tricks, and Traps of outsourcing. I hope you find it helpful.
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