4 Major Risks of Outsourcing Your Business

4 Major Risks of Outsourcing  Your Business

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Outsourcing a business is becoming increasingly popular as more companies look for ways to lower operating costs while obtaining specialized services. Outsourcing routine functions like transcription, billing, record management, and shipping is commonplace and usually can be managed successfully.  Outsourcing is only a good fit for a company as long as it saves your company money in both the short and more importantly the long-term.

Many companies have tried outsourcing to other companies only to have continually lost money because the outsourcing partner may have had hidden fees or they continually mess up the the services in which they were outsourced to do in the first place. In some cases outsourcing can even make or break a business. With that said, it is important to keep in mind these four possible risks of outsourcing your business.

Scheduling snafus

Many specialized services can competently manage a schedule of services being outsourced by company clients. However, the possibility of a backlog or delay exists. Before choosing an outsourcing operation, discuss the importance of meeting deadlines and ask for references from others companies to determine if due-dates are being met to the clients’ specifications. In addition, your order may be shuffled into a client queue that lowers your priority while giving larger orders premiere attention.

Transporting/shipping product

Moving product from one location to another can be tricky. Weather problems on part of the route may cause delays. Road construction or repair during high-traffic periods may lead to slowdowns. Shipping transport, whether truck, plane, train, or boat, may be hindered by accidents or emergency repairs. It is important to explore the transport schedule and provide flexible times with a backup plan if needed to ensure timely delivery of your product. You also want to make sure that you use a trustworthy company such as Meyers Transport Inc to move your product safely and in a secure and timely manner.

Record-keeping

When outsourcing business to another company, it is important to maintain clear records, including schedule, inventory, and processing. These can be managed in a variety of ways including by software, but you will want to ensure that computer applications are compatible for record sharing purposes. Tracking and insurance features should be considered as well, to protect products and information related to the business. A backup storage unit, whether a physical plant or an online program, is a must for any business, and especially when outsourcing any services. Having anytime access to records related to your outsourcing functions is also important.

Fees

When preparing an outsourcing agreement, carefully review the fee structure to avoid any hidden or extra costs. For example, does the overall fee include insurance, shipping, record storage, and transport? Will the outsourcing company guarantee that its employees are insured and bonded, and cover those expenses? Make sure all costs are clearly spelled out up front.

Outsourcing can be a terrific win-win approach to various operational challenges, but before partnering with another company, perform due diligence and all of your homework to ensure the quality service and complete protection of your business process and products. An ounce of prevention is worth a pound of cure.

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