Pitfalls of IT Outsourcing

There are many risks associated with outsourcing that should be considered when planning to outsource some functions.

  • Loss of flexibility in reacting to changes in business conditions. It is impetrative that communication continues throughout the life cycle of any outsourcing agreement. This means letting the IT outsourced company know of any change of strategy or conditions that might impact their ability to deliver the services properly.
  • Potential threat to security or access to confidential information. Most records from payroll, financials and HR (Human Resources) are stored on computer systems. It is important to have a process in place that ensures that these details remain confidential and can be accessed by relevant personnel.
  • Job losses. Many people believe that IT outsourcing only leads to people losing their jobs. While this can sometimes be true, and while there might be a perceived threat to their economy, most often the roles that are outsourced are those that typically a company have difficulty fulfilling anyhow.
  • Potential loss of managerial control. Naturally it can be easier to manage your own personnel than relying upon a third party, but again, this can be resolved with good communication and regular update meetings.
  • Damage to morale. Some people may react badly to a new system or outsource agreement particularly as most people don’t like change or uncertainty. Hence the reason to communicate plans from the onset.