Operational Risks in Outsourcing

Discussion in 'Growing and Managing a Business' started by katherine Jennings, Aug 14, 2015.

  1. katherine Jennings

    katherine Jennings
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    Which metrics should I consider to overcome operational risks arising due to employee turnover and technological advancements?
     
  2. MyDigitalpoint

    MyDigitalpoint
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  3. OhioTom76

    OhioTom76
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    If you have in-house talent that was previously managing certain areas of your business, and you decide to outsource that instead, you better have a backup plan when it backfires, because if they leave as a result, you're starting from square one trying to recruit in good in house talent again, as well as the ramping up period it's going to take these new employees to get acclimated to your business enough that they can start providing real value. Someone once explained to me that in higher level positions in a company the new employee is basically worthless for the first year or longer, until they really start to develop a deeper understanding of the business as a whole.

    I can certainly vouch for this, when I look back at once of my former jobs at a large national online insurance agency. My first year there I spent a majority of my time learning how their in-house reporting and business intelligence worked, and how to tie this data together with external reports from our ad network vendors, in addition to all their "in house" built tools for other facets of my job such as testing out landing pages and user experiences, pricing models, P&L reports, and such. It took me a good solid year before I could reliably take over all the day to day operations of the role that my boss had previously been doing, so he could be freed up to work on some other larger projects.

    And if you loose an entire team over outsourcing, and there is nobody from that original team of people who were previously managing that section of the business, then there will be nobody there to train any new people and help bring the projects back in house and build a new in house team. The last thing you want to be doing is trying to hire for roles you don't even really understand.
     
  4. m0n2k

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    Outsourcing will always lower the quality of your business. Unless you have people who manage the quality of your business when it get's out sourced there's no way to know how it's being ran. The only safe way to outsource in my opinion is have a former employee of the business where it started, manage it in the place you outsourced it to. A lot of things get out sourced with out the right precautions and become crappy.
     
  5. Master

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    Generally Outsourcing is done for the purpose of cost cutting or to decrease the headcount of the workforce.Its good only when you have good command over the outsourced agency other wise chances are that you might not get quality work as you were expecting.
     
  6. kaian

    kaian
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    I do not think a certain metric is enough to address the issues of turn over and tech advancements. The mere fact that you decided to outsource it means your company and its employees are already fine tuned to the new technologies. When it comes to turn over rate, people leave because of poor management and benefits or for the lack of a better system in place.
     
  7. Nox

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    I think outsourcing isn't always the solution to high employees turnover and technological advancements. With market forces consistently changing, I can see why the use of an external company for some tasks is appealing, they are specialists in their respective fields, it's cheaper, etc. I think you should not let the two problems mentioned above become the the reason for your outsourcing, see whether there are other benefits to outsourcing. Some of the companies that you could be using to outsource could be growing their business to become more a part of their supply chains or they could be starting new ventures that may lead to a lesser reliance on you as a trading partner. What I'm getting at here is you don't want to be crowded out of the market, when so many of your processes become outsourced and you're left being the middleman. If you can afford it, I would rather suggest placing more funds towards understanding the reasons for the high staff turn over, and research and development.
     

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