Business Development

Factors to Consider Before Outsourcing

Why Outsourcing?

Let’s face it: outsourcing may not be for everyone. While choosing an outsourcing vendor can provide significant benefits for businesses, it is completely optional and ultimately up to each individual business to decide whether it is the right fit for their needs.


By outsourcing, you are offloading the responsibility of certain business functions to an expert in that field – freeing up your time and resources to focus on what you do best. 

So is it the best option in your case? Maybe it is, maybe not. It’s up to you.

But the reality is that outsourcing is more common than ever in today’s fast-paced and ever-changing world. Why? 

Well, for starters, outsourcing allows businesses to cut costs and increase efficiency. That’s super helpful for startups (of course, you can outsource even if you have a large company). 

But before diving into this crazy business world, there are a few things you might find helpful to consider.

Here’s a list of factors you may want to consider before outsourcing:

  • Cost of Outsourcing
  • Quality of Outsourcing
  • The Importance of Choosing a Reliable Vendor
  • Communication Channels
  • Cultural Differences
  • Time Zone Differences
  • Data Security & Privacy
  • Intellectual Property Protection
  • Legal & Regulatory Compliances
  • Vendor’s Workforce & Infrastructure
  • Project Management
  • Exit Strategy

So, are you ready to learn more about these factors? Let’s dive in!

Bluegrid - Outsourcing vendor

Cost of Outsourcing

One of the reasons why you outsource is cost, and that’s why we want to talk about it first.

Outsourcing can be a cost-effective solution, especially for small businesses and start-ups, but it’s essential to consider all the expenses involved (and not just a few things you think is the final price). The best way to do this is to talk with your chosen outsourcing vendor and do deep research.

So yes, outsourcing can help save money in the long run, but it’s important to consider the upfront costs like

  • Fees for vendor selection
  • Project management
  • Communication process, etc.

Quality of Outsourcing

Do you want the best quality for your company, but you’re not getting it anywhere?
The quality of the work can affect the overall outcome of the whole project so choose wisely. 

Thoroughly research potential vendors, check their references, and review their portfolios to ensure they have the necessary skills and experience to complete your project successfully. 

Put all the expectations “on the table” and based on those, decide what your company needs and who is the best solution for that specific goal.

The Importance of Choosing a Reliable Vendor

Connecting with the previous factor, outsourcing to a vendor with a good reputation and experience can provide peace of mind and help ensure the success of the project. 

A vendor with a good reputation will have a proven track record of delivering high-quality work and meeting deadlines. It’s also pretty useful if you could find an outsourcing provider that is experienced in your industry or niche. Or, even better, that works only in your industry.

Checking the vendor’s compatibility with your company and experience in the market and in the specific services needed for the project can also provide valuable insights. Working with a vendor that has experience in similar projects can help reduce the risk of any misunderstandings and mistakes.

Communication Channels & Language Barriers

When someone says outsourcing, the first association is often offshore outsourcing. And one of the biggest problems with offshoring is language barriers and cultural differences (we will mention the other one in the next section).

The vendor should have a clear understanding of your business requirements, and you should ensure that they have the necessary resources to communicate effectively. If you hope you can communicate via email and Google Translate, think again. That might not be the best solution.

It’s important to agree on the mode of communication that works best for both parties and ensure that it is easily accessible. 

Cultural Differences

It’s not just a matter of how professional or skilled your outsourcing partner is. Sometimes, “the vibe” is also important. It’s okay to make a decision based on whether you like their culture or not.

Communication, project timelines, and even the quality of the work can all be impacted by these cultural differences. Working with a vendor who is aware of and capable of following your company’s culture is essential. A vendor who is familiar with your business culture can meet your needs, and ensure that your expectations are met.

Time Zone Differences

Time zone difference is one more thing to think about when you’re outsourcing offshore. This is something that either can give you a huge advantage or be a big boundary.

On the one hand, you can’t follow the workflow and it’s hard to stay in touch with your partner. This could be a problem if you really need someone that will be available for you 24/7.

However, on the other side, it’s great to wake up and realize that your whole to-do list from yesterday is clear. This will allow your business to work like a machine every day and every night.

Data Security & Privacy

People are especially skeptical about data security when it comes to outsourcing processes. However, this is something that can be easily managed with the right outsourcing vendor. 

A well-established data handling and security policy – including firewalls, encryption, and access controls (or more in the case of some extremely secure industries, like finance or IT) – should be in place at a reputable outsourcing partner. 

To protect your data and make sure that it is not used improperly or shared with unauthorized parties, it is also crucial to establish a non-disclosure agreement.

Intellectual Property Protection

You do not wanna risk losing the competitive advantage you have worked so hard to create, right? Before selecting an outsourcing vendor, evaluate their experience in handling intellectual property matters, their policies and procedures for IP protection, and the legal framework they operate under. 

To do that, take your own research, read about other people’s experiences, and discuss this with your potential outsourcing partner.

It is recommended to have a detailed intellectual property protection agreement in place that outlines the ownership, usage, and protection of any intellectual property developed during the outsourcing engagement.

Different countries have different legal systems, which is something we are all aware of. Before getting into any sort of agreement with your potential outsourcing partner, take a look at laws and regulations such as labor laws, tax laws, or some other regulations specific to your industry.

You also need to consider the potential implications of any new laws that may come into effect during the outsourcing engagement. Even if you’re not experienced with the law system of a certain country, make sure that your outsourcing partner has a thorough understanding of this field and has the necessary expertise to comply with them.

Outsourcing Vendor’s Workforce & Infrastructure

The quality of the vendor’s workforce and infrastructure is something that will determine the quality of their final service.

Consider whether the vendor has the right personnel to handle your project’s specific requirements

  • Do they have the required expertise and experience? 
  • Do they have the required equipment and resources?
  • Do they have the right technology to complete the task?

Evaluate their work history and ask for references if necessary. Ensure that the vendor can meet your specific needs before outsourcing to them.

Project Management & Governance

When it comes to project management before outsourcing, there are a few things you need to evaluate:

  1. Project management methodology – define quality standards and goals
  2. Project management tools – define software applications designed to help teams manage projects, tasks, and goals efficiently
  3. Project evaluation and review –  ensure that the project is evaluated for effectiveness and to identify areas for improvement
  4. Project timelines & milestones –  ensure timely delivery and track progress throughout the project
  5. Project governance –  ensure that the project is managed effectively and in accordance with best practices

Additionally, establish clear lines of communication and reporting with the vendor to ensure transparency throughout the project.

Exit Strategy

A plan implemented by a business or organization to potentially end or terminate a business relationship with a supplier or service provider is known as an exit strategy. Even though you might not plan to terminate the agreement early, it’s always the best option to have it as a plan B. 

What would happen if the vendor fails to meet your expectations or if you need to terminate the contract early? In this scenario, the contract needs to have a clear exit clause  (including provisions for intellectual property and data security). Also, it would be a good idea to establish a transition plan to minimize disruption to your business operations. 

With a clear exit strategy in place, you can outsource with confidence, knowing that you have contingency plans if something goes wrong.

Final Thought

If you’re considering outsourcing your business, take the time to carefully evaluate your needs and potential vendors. So, long story short…

Do your research, create a plan, interview your vendor and you’re good to go. Good luck!

Contact us to find out how we do it and if we are a match!

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