Estimate Project

When outsourcing is bad idea?

by | October 22nd, 2018

I have been working as an outsourcing partner for digital services for many years now. From this perspective, the title of this post makes it look like this article is either marketing bullshit or that I’m writing an anti-ad for myself, doesn’t it?

But, I prefer to be realistic and I don’t believe in coins without a flip side.

Who should you be interested in this topic and why?

  • If you are new to outsourcing – you’ll get some new ideas to get the most out of it;
  • If you are currently outsourcing, but you feel something is not working quite right – you will get some tips to identify issues that may apply to your situation; 
  • Even if you’re not outsourcing any work yet – well, you may benefit indirectly by reading this article. Generally, a good way to structure large corporate projects is by splitting them into smaller ones. Therefore, this article can give you some new ideas about how to better manage work in-house.

Since I’m in the position of being both a customer and service provider in relation to digital services, I have experienced real situations when outsourcing was a really bad idea and wound up doing more harm than good. This can happen when the customer or project:

  • Lacks the proper skills to control the outsourcing team;
  • Lacks time and/or financial resources when the project is highly complex; 
  • There is a tight coupling of work and no way to split it;
  • The project must adhere to various security and/or legal limitations;
  • Clear and reachable goals have not been defined;
  • Overly-optimistic expectations from the outsourcing process.

Let me now clarify each of these issues.

Lack of proper skills to control the outsourcing team

There are several reasons why you might want to outsource some projects. Nevertheless, for outsourcing to work properly, you need to have a clear understanding of how to:

  • Control the work;
  • Accept the work;
  • Integrate the results into the normal production process;
  • Transfer expertise and assets to yourself;

Organizing the workflow with an outsourcing partner requires discipline and managerial skills.

By definition, the outsourcing model requires at least two agents: you and your outsourcing partner. Assuming  you have all the skills mentioned above, your outsourcing partner must also be a professional to ensure that the collaboration runs smoothly. A good question here is how to choose a professional outsourcing partner. But that’s a subject for another post.

Lack of time and/or financial resources when the project is highly complex 

Lack of time to properly manage an outsourcing project leads to gaps in communication and decreases general quality.

Lack of financial resources leads to the temptation to hire low-budget outsourcing partners who may not have the appropriate skill set or level of expertise to complete your tasks properly and/or on schedule.

Either of these two, especially when combined with a complex knowledge domain, makes it highly unlikely that you will be satisfied with the results. In this case, it would be better not to outsource the project in the first place.

Tight coupling of work and no way to split it

This happens when some members of your team are already working on the project. You would like to hire outside assistance to complete it, but the project cannot be split into modules or subprojects at this time. In general, this situation can be solved with some planning efforts and foresight, but until it is – avoid outsourcing, please.

 Security and/or legal limitations

In some situations, a project can’t be outsourced due to certain legal or security restrictions. 

Examples are:

  • HIPAA limitations;
  • Agreements with incubators or other organizations;
  • Confidentiality of data, algorithms, code, etc;
  • Other limitations.

This point is not about trust between you and your partner. But about real legal limitations.

Clear and reachable goals have not been defined

“If a man does not know what port he’s steering for, no wind is favourable to him”.  (Seneca)

And, for sure, don’t expect your outsourcing partner to set your goals for you!

Overly-optimistic expectations from outsourcing

Certain assumptions you may make might well be wrong, such as:

  • Relying on the dev team too much and assuming they’ll take control of the project;
  • Assuming your outsourcing partner can read your thoughts;
  • Assuming your outsourcing partner is willing to share your risks (financial, general success)

While all this may seem obvious, these are actual situations we have encountered.

To sum up

In this post, I’ve listed several situations in which you should avoid outsourcing unless certain issues are resolved. The good thing is – even if these issues apply to your project – usually they can be resolved. Most of these issues can be solved by taking direct action, others may require some research to find a workable solution. 

If you have an issue from the list above or you know of other problematic situations that are not mentioned here – let me know. We can work together and find ways to solve them or at least extend this post and make it more complete.

 

Stay tuned and stay good.

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