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IT outsourcing: to be or not to be?

August 21, 2013

outsourcing risks

A variety of third party service providers, that differ in size and specialization bring a question of IT outsourcing risks to be the most urgent one. Moreover, when numerous companies hire multiple external service providers, in any case, they need to be aware of what to expect.

So, what are the risks of IT outsourcing and how to mitigate them? Join the discussion!

Outsourcing some aspects of your business or hiring a dedicated team for specific project became a wide practice. As business owners want to save time, they reduce costs and focus on company’s core issues. High-quality services, implementation of the latest technologies, flexibility and worldwide reach are weighty arguments. Along with all benefits, choosing this model can not always bring the desired result. If not to consider possible risks in advance, the outcome can be quite contrary towards what you were expecting to get.

Trust but check you must

The most serious risks, associated with outsourcing in IT sphere can be grouped into 5 common types. As you may have learned from our article “What is IT outsourcing?” they are:

    • weak management and possible loss of control;
    • threat to information confidentiality;
    • further business development opportunities;
    • quality problems;
    • hidden costs.


  1. Weak management and possible loss of control. Actually, it is not that easy to choose an outsourcing partner as well as not all business aspects can be easily outsourced. Thus, to minimize possibility of appearing any problems in future, it is better to conduct an IT audit. As a result, it will be possible to make a list of necessary services for your project. Formulate goals and objectives clearly. It helps to coordinate work and become aware of current project status and state, excluding risks of loosing control over the situation in general and allowing to focus on the more urgent tasks.
  2. Threat to information confidentiality. This factor is ranked as the most important one when selecting an outsourcing service provider. Can an outsourcer guarantee a high level of data security and option of signing a non disclosure agreement? All these matters and should be checked thoroughly at the stage of decision making to secure yourself from possible failures.
  3. Further business development. Your team can access limited capabilities. And vendors have multiple resources at their full disposal. Obvious advantage, isn’t it? But to what extent your business will depend on a particular supplier. Maybe it is worth to try a pilot project?
  4. Quality problems. Quality issue is widely doubted and discussed. The company offering low quality outsourcing services simply couldn’t survive the competition in the modern IT world. Only qualified specialists proved to be skilled professionals by clients feedback and performed work can compete here. Still, it is better to double check companies that offer too low prices.
  5. Hidden costs. Additional expenses may be divided into those related to the management and monitoring (like travel expenses) and those that are necessary for infrastructure development. Truth to be said, exclude possibility of involving additional costs is almost impossible. But to secure yourself insists on clearly structured contract, covering all aspects. It will help you not only control entire process but foresee and plan possible expenses.

Outsourcing vendor is a company for which information technologies are the main specialization. Highly qualified and trained specialists, integration of the latest technologies allow to provide quick solution for almost any problem that may appear.

We discussed potential risks one can face when hiring an outsourcing company. How to mitigate them? Below we presented a list of tips you may follow and use, when outsourcing a project.

  • Think over and formulate your project goals and objectives clearly.
  • Conduct though planning of your project development.
  • Make a rule to communicate with the team, offering dedicated services to be in touch with the situation.
  • Research and references are the best and right way to find a good outsourcing company.
  • Cooperation should start from well structured contract. Great if there is an option of signing NDA.
  • Learn what security guaranties can the third party service provider offer.
  • Try a pilot project, if you are not sure the vendor is competent enough to fit your particular project goals.