The 3 Biggest Outsourcing Mistakes Businesses Make – And How to Avoid Them

February 7, 2024 Theresa Rex

Business office with employees talking

Outsourcing – especially business process outsourcing -- is more accessible than ever. What used to be the tool of enterprise-level players with global reach is becoming a tool for businesses of all sizes across any number of industries, and each one arrives at outsourcing with a set of needs as diverse as the products and services they offer. The right outsourced team can be an asset that gives companies the competitive edge necessary to stand apart as an industry differentiator or enable them to save cash at a critical time. But how do you get there? Every newcomer to BPO is acutely aware of the potential for costly mistakes in the outsourcing process. And while outsourcing mistakes might be great fodder for motivational posters, the leaders and entrepreneurs looking to implement an outsourced solution already have enough of those.

What they don't have time for – what you don't have time for if you're planning a strategy that includes outsourcing – is an outsourcing partnership and plan that’s anything but seamless and successful. If you had the capital and hours to spend on a months- or years-long learning experience, you likely wouldn't need to outsource in the first place!

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Fortunately, there are some best practices that can keep your outsourcing strategy from failing. And if you really need a motivational quote to hang in the conference room, you'll be able to use Zig Ziglar's classic: "Some of us get to learn from other people's mistakes, and some of us have to be other people." So, which outsourcing mistakes can you thank other people for making first?

  1. Finding the Cheapest Provider Available

  2. Letting Providers Tell You What You Need

  3. Not Prioritizing Cultural Fit and Communication

  1. Finding the Cheapest Provider Available: A Recipe for Outsourcing Mistakes

    client experiencing Outsourcing Mistakes

    If you're considering outsourcing because your primary objective is to contain or save costs, that puts you in the majority: 59 percent of organizations said that was theirs, too, when Deloitte asked in 2016. It's not hard to get into a numbers-crunching mode that almost gamifies the vendor selection process. "Sure, I'll save an average of 65 percent no matter who I choose, but if I go with the cheapest provider, I can save 82 percent!" And we get it – that's a tempting proposition no matter how you slice it. Until you put it under a microscope.

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    Vendors who can promise savings far afield of the industry average or who can't provide robust employee experience plans and attrition numbers do both for the same reason: they don't mind churning through human capital and your money because it means there will always be another newcomer to BPO that's drawn into the promise of even more savings. And in complete fairness, the quality of the talent they assign to your project might not always be sub-par, it will just be sub-par a lot of the time.

    Underqualified talent isn't the only thing to be wary of when you encounter a BPO vendor offering a too-good-to-be-true price, however. There may be other concerns, like the quality of the facility and onsite security protocols. Now that practically everyone is working from home, there's a new wrinkle to contend with: has the provider done enough to ensure that your company's data is protected from an off-site, offshore location? Do they have the management chops to routinely train, equip and supervise employees for remote work that protects the most important thing you'll have invested in the relationship – your business and the information you've trusted them to safeguard?

    If not, what would it cost you to have those things compromised or mishandled? What would it cost you to repair any ensuing damage?

    In the end, by taking your tasks offshore, you’ll already be saving anywhere from 50-75 percent. Your cheapest option is almost always your most expensive option in disguise, once you're done throwing good dollars after bad and spending more time than you had to begin with on rectifying what went wrong. Focus your attention on a company that makes providing and investing in quality talent foundational, and you won't just save money. You'll be gaining a partner that's as invested in your success as you are, and that's worth much more. This is as you can imagine, one of the biggest outsourcing mistakes.

  2. Letting Providers Tell You What You Need

    Frustrated boss looking at outsourcing contract

    Imagine that you're about to make a fairly common, relatively big-ticket personal purchase that most people will make at some point in their lives: you need a new car. You've done your research, made a list of your 'must-haves' and 'nice to haves' and you know just what you're looking for. Since your kids are in college so you'd like something a little sporty but fuel-efficient since it seems like your commute is longer than ever these days. You wouldn't mind a few bells and whistles, but since your kids will want to borrow the keys over Christmas break, safety is still crucial. So you go into the dealership, tell them you're interested in the sportiest hybrid they've got, with the highest safety rating available, preferably in blue but -- that's not a deal breaker.

    Now imagine that the salesperson listens intently, tells you that they have just the car for you, and then leads you right to a big minivan. It's got a great safety rating, and since you mentioned kids, you're going to want extra seating, they tell you. As far as bells and whistles go, it's got heated seats and satellite radio! Practically nothing about this vehicle is right for you – what conversation was the salesperson even listening to? You tell them the minivan isn't what you're looking for. They assure you that this is the one – trust them, they've been selling cars for a while, so they know what they're doing. Plus, it's blue! What's the problem?

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    You wouldn't buy this car. Yet, BPO newbies will sometimes be drawn into this same dynamic when they're shopping for vendors. That's a huge mistake, but it's an understandable one. After all, you're new to outsourcing. Maybe you do need a minimum of three full time employees on your virtual team. Perhaps it really does take two years at the very least to see the results you want from that team. Maybe it's better to use the same ERP the vendor uses, even though you're really happy with the one you've got. After all, they would know!

    That falls apart under scrutiny. You know best what your business needs. A quality BPO provider will be able to listen to those needs and create a solution that meets them. Along the way, they should act as a guide to the ins and outs of outsourcing and offshore teams, or they might be able to suggest ways to address other issues that you didn't realize you could streamline or improve alongside your initial concerns. But ultimately, there is no need to try and force your company or your project into parameters that you didn't set yourself, use technology you're unfamiliar with or sign on to something that doesn't serve you. There are providers out there that take a white-glove approach to outsourcing and seeking one out will yield the successful result that drew you to outsourcing in the first place. This is one of the most common outsourcing mistakes.

  3. Not Prioritizing Cultural Fit and Communication

    manager Prioritizing communication with outsourcing partner

    Here's another mistake that's actually really understandable. If you're looking to outsource a function of your finance and accounting department by hiring a new AP clerk, then chances are high that the most important thing to you is finding a provider that's an expert in finance and accounting outsourcing – that technical skill may override the "soft stuff" like how you'll communicate with each other, what your experience as a customer will look like or how onboarding will take place.

    Don't ignore the soft stuff.

    Instead, consider your outsourcing contract a long-term relationship. Like any business partnership, you want to work with a company that shares your vision and core values. Don’t cut corners in this area or you’ll wind up reiterating your goals again and again, because while your chosen provider may be an expert in finance and accounting outsourcing, they won't be an expert in your company.

    As an extension of your brand, your BPO should be able to seamlessly integrate into your current culture, and without emotional buy-in from them, that's going to be a battle from the very first day. Will you be talking to one person each time you interact with the provider, or can you expect to be passed down the phone tree every time you have a question or concern? How will the success of your program be measured, and what happens if the KPIs you set aren't being met? What amount of say will you have when it comes to the hiring process, and how will you receive updates about what's going on with your team?

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    The best outsourcing providers, whether you're looking for a customer care solution, at-scale graphic design resources or a virtual team of accounting talent are primarily experts in people – at the end of the day, people make up the core of any offshore talent solution and people make up the business relationship that's at the heart of outsourcing as a strategy.

    Start by looking at how your outsourcer treats the people that will ultimately be working for you. This will determine everything from the productivity of your offshore team to how long they will stay with the company and the depth of investment that team will have in the work they're doing for you. From there, look at how your outsourcer treats their other clients. Are they long-term clients, or do they have a high turnover rate? If they have a history of long-term partnerships, that's a good sign that the communication and performance quality the provider brings to the relationship.

    Ask to see actual employee attrition rates and get client referrals. Get answers up front about how you'll communicate, who you'll communicate with, how often you'll do that and where you'll direct concerns if they arise and how they'll be handled. Get a firm timeline on knowledge transfer and a clear picture of what to expect during onboarding and beyond. Don't commit the same outsourcing mistakes many business leaders make.

Choose Personiv for Your Outsourcing Needs and Avoid Committing Any Mistakes

ceo choosing business outsourcing partner

Personiv has a 35-year + history comprised of legacy partnerships with back office service offerings from accounting to creative services. We pride ourselves on finding and training the highest-quality talent to build virtual teams that function as seamless additions to the in-house business our clients have worked hard to build. A solution with Personiv can represent as much as a 75 percent cost savings and unlock efficiencies that let leaders like you reinvest money and time back into what matters most.

If you're starting to explore outsourcing as a strategy at your company, our "Getting Started" resource library is a great place to start. You'll find articles, white papers, podcast episodes and more – all exploring topics for outsourcing newcomers, from deciding whether it's right for you to a step-by-step breakdown of what to expect when you choose a provider.

Start by downloading our FREE Ready to Outsource Workbook, or get in touch to talk to one of our outsourcing experts today.

With these tips, business decision-makers will be able to avoid the most common outsourcing mistakes and make an informed decision when approaching any BPO contract.

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