The Cons of Outsourcing
5. Frequent Delays in Deliverables, Aka: The 4x Rule
The one thing that you will quickly learn when working with outsourced labor is what I (and many others) refer to as the ‘4x Rule’. This general rule, which seems to inevitably apply to most outsourced projects and employees, refers to the fact that it will take four times as long to complete the project, assignment or duty than what you estimate or are quoted. This can occur for a variety of reasons including communication lag, miscommunication, inaccuracies in implementation and so forth. It’s a negative aspect of outsourcing that is difficult to avoid.
6. Intellectual Property & Privacy Concerns
Within the United States, we have laws, rules and regulations. When you employ people outside of domestic borders, as done when you outsource foreign labor, you must pay closer attention to intellectual property (IP) and privacy concerns. As a web technology guy, I find this specific point to be the most troubling. IP is not something that can be closely protected when an employee resides in a country that doesn’t abide by American laws.
For example, let’s say that you are launching a software company. Part of your software is being developed by a team in India, where you are gaining tremendous cost efficiencies — 1/6 of what you would normally pay. However, as your project continues and is better defined, one of your programmers goes rogue and steals your code. How do you take legal action?
While there are ways to minimize risk, the basic premise of this example becomes complicated and can be avoided by not outsourcing or developing legal agreements to ward off these types of issues.
7. Lack of Focus on your Project
As a business owner, one of the biggest concerns that you may encounter is ensuring that your outsourced team is giving adequate attention to your project as much. Because the employee may be contracted as a part-time worker, you can only hope that your project is at the top of their priority list as it pertains to other clients and projects. In comparison, the productivity of in-house employees is more easily monitored.
When a contracted staff member is working remotely, it can be difficult to ensure projects are on task and that they’re not working for other clients on your dime. As a safe guard, develop daily checkpoints and weekly milestones to ensure projects are performed with efficiency and accuracy.
8. Personal Conflict
You may or may not share my final concern about outsourcing, as it may be simply be a personal conflict of mine. At a time when high unemployment rates plague domestic and foreign markets, you are potentially preventing another American from getting work by outsourcing projects to a foreign person.
As much as this honestly hurts me, I also appreciate first-hand that as entrepreneurs we are forced to consider how to minimize expenses in order to build a profitable and sustainable company. This is a political and personal issue that most entrepreneurs have dealt with and may influence your decision when it comes to assessing your staffing needs.
Did I miss something? If you’ve outsourced projects in the past, did you have a positive or negative experience? Did you find the perfect recruit? Did you work with the designer from hell? Let us know about your experiences in the comments section below.
And if you’re thinking about outsourcing for the first-time, I suggest testing it out to see whether or not your business can benefit from it. Let me know how it goes.
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