Pragmatic Outsourcing

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

• IP security protection
• Data security and privacy protection

Internal – Organization

• Cost-reduction expectations
• Organizational commitment
• Organizational maturity – multiple aspect of being ready to outsource

Internal – Team and Personal

• 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

August 26, 2008 - Posted by Nick Krym | Making Offshore Decision | Offshore Cons, Offshore Risks, Offshore Tips