5 Reasons Why Outsourcing has a Serious PR Problem

Shaunvir Mahil October 12, 2018

In my previous blog, I had looked at why clients’ due diligence is often misplaced when outsourcing. Even when clients are trying to be diligent, they are still not being diligent. This happens because they are being overly afraid and apprehensive. This mistrust causes clients to focus on the wrong parameters and in turn results in irrational decision making (examples of which I had shared in my previous blog posts).

I often meet prospective clients in person and on-site in their offices. This is a great opportunity for them to ask me tough and challenging questions about outsourcing. Instead, 99% of them tend to ask basic questions, answers to which they could have easily found out from our website.

However, they only want to meet me to deduce if we are a legitimate organization, and the objective of their meeting is to pacify their fear – and not necessarily assess the business case for outsourcing. Frankly, this is a waste of time, because they do not need to meet me in person to deduce whether or not we are a legitimate company. Instead of focusing on legitimacy, they should focus on factors such as our capability. But they are not doing this, because their attention is driven by fear as opposed to objectivity.

We have (primarily in the previous blog post) clearly established that fear is the main underlying emotion, clients’ experience while outsourcing. In this blog post, we will go one step further and answer all questions related to clients’ inhibitions while outsourcing. Why are clients so afraid? Why do clients have so much fear at even the thought of outsourcing?

The answer is that outsourcing has a massive PR problem. Here are 5 reasons why:

1Perception

The general perception and image of outsourcing is not positive. This is partly due to the fact that, when we think of developing countries, we often think of corruption, scams and ‘getting ripped off.’ [This is one of the reasons why so many clients fish around for the cheapest quotes rather than focusing on assessing capability. I believe some clients are more focused on “not getting ripped off”, as opposed to actually getting the job done, which ironically results in them getting ripped off. Whilst they may not have spent so much upfront, if you don’t achieve your goals, you have still wasted your money. Are clients trying to protect themselves because they are worried that they will get scammed? However, in doing so, they achieve the opposite of what they had intended to do?]

Don’t get me wrong, as this view is not unjustified. The truth is that, developing countries do have a higher level of corruption (this is not a personal view but the conclusion of Transparency International, etc). Whilst this might be true, it causes us to ignore another fact, that despite this, reputed offshore outsourcing companies are just as professional as US corporations and often, even more so. Just because a different country has a higher level of corruption than the USA, does not necessarily mean an offshore company based there is less professional than any US-based organization.

The truth is that clients are extremely apprehensive about outsourcing, as much stigma is attached to the industry that the starting point for an outsourcing vendor is not just ‘zero’ (as would be the case in any other industry), rather it’s ‘in the red’. As Chris Pfluger told me in a case study, I had filmed with him in 2013, “I didn’t think it was going to work,” (he also then goes on to say, “But it has been beyond expectations”; you can watch the case study here).

Hence, outsourcing vendors are at a disadvantage before they even start a dialogue. Since, the industry is received with mixed reviews and scepticism; you have to work twice as hard to prove yourself and establish a strong reputation and become a highly reputed outsourcing company. This means that outsourcing vendors have to raise the bar, and uphold levels of professionalism that are not even necessitated locally. (I know that the above points are very bold, and ones that you are unlikely to believe and deem biased. Click here if you would like to learn about why this is true: Why Reputed Outsourcing Companies are often MORE professional than US businesses).

 

Thus, you have a very strange market scenario whereby:

  1. As a trend, developing nations have higher levels of corruption than the US and so it is only logical to be cautious when engaging in any activity offshore.
  2. Most clients focus on acquiring cheap services, partly because they want to protect themselves from being ripped off.
  3. This leads to clients partnering with rogue outsourcing companies. Rogue firms uphold significantly lower standards of professionalism than you would experience in the USA.
  4. As a result, many small to medium sized businesses end up getting their fingers burnt and experience a standard of business ethics that they are totally unaccustomed to.
  5. These poor experiences only serve to further reinforce the cycle and the mainstream view that you are in dangerous waters when dealing with an offshore entity.
  6. Very few clients are truly aware that if they partner with a reputed offshore firm, they are in safe hands and have nothing to fear or worry about. They will often be safer with an offshore firm than even a local one, because the former will often go the extra mile to ensure its reputation remains unblemished.

Perception and image are very important in any business undertaking. Simply look at the impact of the book ‘The 4-Hour Work Week’. It just took one book to throw a positive light on outsourcing and you immediately had tens of thousands of companies outsourcing to India overnight. That’s the power of positioning, pitching and framing correctly.

The fact that you will often experience a higher standard of professionalism than you would get in the US by outsourcing is quite simply unknown and untold. If it were, perhaps so many clients wouldn’t be so afraid.

2Reviews

The second reason why outsourcing has a PR problem (which relates to the first), is that it gets a seriously unfair deal when it comes to reviews. When clients achieve a brilliant result with a massive cost saving, rarely do such stories make headlines or get promoted. However, if a client does have a negative experience (as I touched on above), it quickly makes headlines and is easily spread, particularly by anti-outsourcing advocates. What is also not appreciated, as covered in an earlier blog post, is that most outsourcing failures are the fault of the client. This crucial fact gets no coverage or publicity. (To learn more about why you should take the mixed reviews about outsourcing with a pinch of salt, click: Why you should not worry about the mixed reviews outsourcing receives; why outsourcing needs a cohort analysis).

3Outsourcing hurts the local economy?

If you were to ask most people in a public survey, whether outsourcing overseas is beneficial or damaging to a local economy, we can safely say that most would be of the latter view. This despite the commonly held view amongst economists that outsourcing has a positive impact on the US economy. We associate outsourcing with the shipping out of jobs by greedy multinational corporate directors, who are said to be outsourcing for only one reason – to increase their fat profits by undercutting locally employable staff. Is there thus, a mindset that outsourcing in some way makes us unpatriotic? Is this why many small to medium sized business owners don’t want to consider outsourcing, because they don’t want to feel unpatriotic by not hiring locally and not supporting, ‘Made in America’? I think so. Despite business benefits, perhaps outsourcing just doesn’t make you feel good. I think this also explains why many clients, despite being very happy with our service are often unwilling to disclose this in public.

The problem with this opinion is that it is too one-sided and lacks meaningful dialogue. There is little discussion or public knowledge about how outsourcing benefits a local economy (something I have written about extensively, click here to read: Why Hiring in the US and NOT outsourcing often HURTS the US Economy ). There is little awareness that most small to medium sized businesses outsource after being unable to hire locally for months. Often, no local jobs are lost when a company outsources.

In 2016, Olivier Cant, the CEO of Eccoss (a Belgium based, Infrastructure as a Service company), filmed a case study with us where he acknowledged that he was able to hire more people locally because he first hired offshore. The problem with outsourcing, however, is that there are not enough clients like Olivier coming out and stating on record the positive impact of outsourcing on the local economy. Because of this, the negative connotations of outsourcing persists, click here to read: If Brain drain is good, why is outsourcing so bad?).

4Stereotypes

When we think of outsourcing, the first thought that comes to mind is that of a call center. We are unlikely to have a ‘fabulous’ experience when dealing even with a local based call center, let alone with one based half way across the world…

When clients think of outsourcing, they often associate it with whatever their perception of an Indian call center is! However, software developers, lawyers, accountants, designers, engineers, etc. in India do not work in call centers (shocking, isn’t it). Many clients have an inaccurate impression and reflection of the immense technical talent available in countries like India. The only first-hand experience the vast majority of us have with outsourcing is that of engaging with a call center despite the fact that 99% of small to medium sized enterprises are not looking to outsource to a call center.

This association coupled with the perception of developing countries and the skewed, one-sided nature of online reviews; all compounds to form quite a biased, inaccurate and stereotypical image of outsourcing. And then, when clients start obsessing over finding the cheapest quotes possible, they end up speaking with rogue vendor, and this view is affirmed. Such vendors will provide unsuitable staff that lives up to that stereotypical image, thus only further exacerbating the problem.

What is not known is that if clients instead obsess over ensuring they partner with a reputed vendor, what you will find might come as a big shock! With a population of over 1 billion people, India is thriving with talented professionals, who are not only highly proficient in English, but are also worldly aware and globally cultured. The problem is that most clients are not focusing on finding this talent.

5There is no Outsourcing PR

The fifth reason outsourcing has a PR problem is that none of the aforementioned negative views are getting challenged, rebuked and even discussed. There is no central entity or organization that is responsible for busting the myths, stereotypes and biases that are being circulated about outsourcing (the reason why I created this blog site).

Outsourcing is a completely unknown entity for many across the world. Often, very few small to medium sized businesses have had limited experience with reputed offshore companies and so they themselves cannot rebuke these myths. As such, their understanding of outsourcing is based on what they hear and read, which we have already established is highly skewed and inaccurate. When such businesses do trial or experiment with offshoring, many fall into the trap of engaging with rogue vendors, which again only serves to reinforce negative stereotypes.

Conclusion

It is not that stereotypes about outsourcing are not true, they are, but at the same time they are equally false, too!

You have to look past the stereotypes and approach the process one step at a time, with an open mind and see how it works for you. If you are sensible and prudent in your approach, it will not be risky (another misconception about outsourcing). Most clients think outsourcing is a risk taking experiment, when in fact, it is less risky than hiring locally (click here to read: 5 reasons why outsourcing to India is safer than hiring  locally.

Whatever your current view of outsourcing is, believe that it is just an assumption. Take it with a pinch of salt and give outsourcing a fair chance. Just like Chris Pfluger, you might be very pleasantly surprised at what you find. More importantly, if you do experiment with outsourcing, and approach it with a clear mind, your decision making will be far more objective and logical – the absolute key to ensuring success overseas.

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