Risks Associated With IT Outsourcing Services
- By: Steve Graham
IT outsourcing services is a part of outsourcing methodology that involves contracting of work or business processes from one organization to another distant service provider who is usually located in developing countries. The business engagement and payment depends upon the results achieved rather than on the time spent over the work. IT outsourcing offers highly cost effective, quick and high quality solutions. However, so many advantages do not come without some risks. Both the partners should be aware of these risks and try to formulate strategies to overcome them.
Some of the Major Risks associated with IT outsourcing services are:
Security Issues: The most dreaded issue associated with web development services and IT outsourcing services is the security risk. Clients trust their development partners with all their confidential and business critical information as well as data. If this information is leaked to the competitors or is misused by anyone the results could be catastrophic for the client. However, most of the reputed service providers have very secure data security measures and protocols installed at their development centers.
Trust Issues: Some proprietary knowledge and competitive advantage is always included in the development of solutions. Clients have to provide this knowledge to their development partners in order to procure most effective solutions for their requirements. This also carries a risk of such information getting misused by the vendor in future. Proper non disclosure agreements must be formulated and signed by both the parties in order to avoid such things from happening.
Regulatory Issues: Financial and health service organizations have a major risk in outsourcing their services. The service provider has access to information about their customers which they can handover to third parties interested in it. The organization will incur heavy financial loss and also get into trouble under regulatory laws. Various US laws put the liability of such events solely on the American companies. Organizations can just make sure that they are partnering with the reliable development partner with proven track record. It would be much better if such critical work is done in-house or sensitive data is not provided to the vendor.
Quality Issues: Expectations of a high quality solution is the most attractive feature of IT outsourcing services. However, Good quality is a relative term which means that a certain solution may be of high quality for the vendor but not good enough according to your quality standards. The cultural difference and poor communication are two major factors for such results. Organizations should carefully evaluate the quality standards of the vendor before offering their projects to them. Also make sure that proper communication is conducted throughout the development procedure as most of the solutions are not as good as expected due to lack of communication.
Hidden Costs: Some of the vendors quote low prices in the beginning and start asking payment for undisclosed services. This is a malpractice that clients should be aware of and try to keep away from such organizations. Further, discuss the cost of the project in full detail before closing the deal. Ask them straight forward for any other cost that may arise in the middle of the project development phase.
IT outsourcing services are very useful and beneficial if proper care is taken in hiring the software development company. Whether you require web development services or enterprise application development services, your choice of service provider will be the most critical decision that you will make during the entire development process.
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