Risk management program

Inadequate Visibility and Control – A High Price to Pay

Written by

As global sourcing vendors are being given more responsibility from a technical and business standpoint, when it comes to global outsourcing, the risks are higher than ever. Additionally, the progressively unpredictable, erratic, and expensive labor pool makes it much riskier. Among the various outsourcing risks is inadequate visibility and control, which could turn out to be a high price for any business to incur. The process of outsourcing requires hiring people to perform a task, communication is limited, and management becomes less involved with people who actually perform the tasks. Many a time, this leads to inadequate performance of tasks or service providers become unable to achieve the expected results. Loss of control in outsourcing could lead to high costs with a below average product delayed late.

Some business leaders assume that major global suppliers like, Accenture, Infosys, or IBM observe high-quality standards. Although top tier vendors rule this industry by delivering excellence, predominantly by adhering to the highest possible quality coding and delivery standards, the trend is now changing with smaller vendors entering this space.

Risk Management Techniques to Prevent Loss of Visibility and Control

Loss of visibility and control in outsourcing relationships can often be rampant, but they can be easily prevented with a few risk mitigating strategies.

Transparent Supplier with Verified Risk Management Processes – As there are a large number of suppliers in the market, they will most certainly guarantee that they have robust risk mitigation practices in place. While choosing a strategic partner, it is extremely important to ensure they have managed similar problems before.

Evaluating a Supplier’s HR and Recruiting Functions – A supplier’s Human Resources and recruiting functions are extremely important factors in completing tasks. Most suppliers experience a high rate of attrition throughout the year. The suppliers must have the capabilities to recruit the right candidates as well as retain them until the completion of a project. Adequate audits must be put in place to assess these capabilities to ensure that the vendors they are selecting have made the right investments in human resources, especially if they are not one of the tier suppliers, or if there is unusually high turnover on their accounts.

Ensuring Qualifications and Certifications of the Staff – Qualifications and certification of the hired staff applies across various roles. For example, clients often pay a premium for project managers, but many of these project managers are not project management professional (PMP)-certified or lack equivalent internal certifications. The easiest way to solve this problem is to require proof of certification from relevant vendors or standard bodies. Additionally, adequate training and development must be conducted for the employees.

Selecting Communication Channels – Selecting the right communication channels is crucial when outsourcing work. Information can be shared by setting up a common VPN or using a custom cloud solution. Furthermore, maintaining constant communication through these channels is important when requesting updates and meetings with project managers.

Analyzing a Supplier’s Industry Expertise and Service Maturity – Service providers should be able to combine top-notch technology expertise with deep vertical business knowledge. It is essential for suppliers that specialize in specific verticals to confirm their capabilities. Business leaders must also periodically evaluate their vendors’ service maturity.

It is crucial for any venture for take necessary precautions for possible risks when entering into an outsourcing relationship. Supply WisdomSM provides more insight on risk mitigation and the evolution of outsourcing. Contact us for more information or to get started with a free trial.