Risk Management

Managing the Risks of Offshore Outsourcing

When you’re ready to use offshore outsourcing, risk assessment and risk management are critical for protecting your organization from the potential pitfalls. Long-term risk management must include plans for data backup and disaster recovery.

Outsourcing Information Technology (IT)

When you outsource your work to another organization in a different location and a different socio-political environment, risk is inevitable, but that doesn’t mean that you can’t minimize and manage those risks. In many ways, outsourcing IT functions carries more risk than does outsourcing other functions. Why? Because when you outsource ID, you’re losing control over a strategic business function and if it goes awry you may jeopardize the security of your information, possibly unintentionally sharing your confidential and proprietary business information. Close monitoring of the vendor is critical and can be achieved through benchmarking and periodic audits. Pay special attention to the ways in which your company and your vendor communicate with each other about the outsourced project. Make sure that feedback lops are in place, so that changes can be made during the project if necessary. Remember that you are responsible for managing the vendor. Before beginning the project, have a comprehensive plan for risk management that identifies all foreseeable risks and their likelihood. Discuss these risks with your vendor and together develop solutions that will make the outsourced project a success.

The Global Delivery Model

Using the Global Delivery Model is an excellent way to mitigate the risks of offshore outsourcing. The Model lets you remain in charge of the project, even though geographic distances are involved. The Model is based on having the project conducted offshore, but with vendor resources located onshore. The local contacts help you communicate with the vendor and increase collaboration between the offshore and onshore teams that are working on the project. In addition, The Global Delivery Model is cost-effective and may reduce the length of the project. The offshore teams provide the results that you need and expect, because they’re working closely with the onshore individuals who guarantee that the system will meet your needs and be compatible with your existing systems. Using the Global Delivery Model is the best way to reduce your risk while outsourcing strategic business processes.