5 ways Outsourcing to India is less Risky than Hiring Locally

Shaunvir Mahil April 25, 2018

“Put your mind at rest about it being remote and overseas, and think about the risks that you remove from the project by using the Virtual Employee model,” Malcolm Paice, COO, Keystone Employment Group, UK

When most think about outsourcing overseas to a country like India or the Philippines, they typically look upon it as a ‘risky move’. But why? It’s rather obvious. Probably you think it’s risky because your data might not be safe, communication might be a problem, offshore workers might be less competent, and so on and so on… While it is true that these are legitimate concerns, they do not necessarily constitute business risks. They are simply unknowns.

The problem with hasty analysis is that we apply heuristics. We see an unknown and take it to mean ‘high risk’. But such thinking is clearly flawed, for an unknown can be a positive or a negative. Just because something is different or new, we should not jump on to the conclusion that it is high risk. But this is precisely the flawed logic we apply when outsourcing offshore. Outsourcing appears to be high risk simply because we ourselves have no experience of it. We are all afraid of the unknown, because it makes us feel as though we are not in control, and that fear manifests itself as ‘risk’. The truth however is that an unknown should only be perceived as potentially high risk, if you have not, as yet uncovered the true reality of the unknown. When it comes to outsourcing to India however, we have no such problem.

All your concerns about outsourcing can be measured and assessed. If you are concerned about data security you can look at an outsourcing company’s data security protocols. If you think communication might be a problem – pick up the phone and have a conversation. If you are unsure as to whether overseas workers are not as skilled as the local talent, assign tests and conduct interviews. Provided you address your concerns about outsourcing with a reputed outsourcing company, you can very quickly turn an unknown into a known. More often than not, you would discover, (provided you are fair in you assessments and speak with reputed companies) that your concerns were unfounded.

However, it isn’t merely the fact that outsourcing does not increase your risks. I would go still further and argue that it in fact even reduces your business risks. Here are 5 things you can do when outsourcing to India. I might add here, that you cannot do any of these, when hiring employees locally, or outsourcing to a local based vendor.

1Free Trials

When you hire remote employees, often you avail a free trial first. With offshore staff you have the latitude to assess the quality of the results first, before having to make any financial commitment.

2100% Money Back Guarantee

Following on from the first point, many vendors also offer a 100% money back guarantee policy within the first month of their service. Once again this protects you from incurring any financial loss should things not work out according to plan. Clients may feel skeptical about the legitimacy of such a guarantee, (and hence feel it does not actually reduce your risk), but provided you partner with a reputed firm you will not face any problem in relying on this clause.

3Cost-Saving

You are launching a new project. You don’t know if your target market will respond favorably to your new idea, but you decide to experiment anyway. If you outsource you;

  • Save 70% on Employee Salaries
  • Have Zero Start-Up Costs
  • Have Zero Capital Investments
  • Zero Overhead Expenses
  • Zero Long-Term Contracts (see Point No. 4)

This drastically reduces your risk, for it significantly minimizes how much you stand to lose should your project fail. Not only are you minimizing your expenses, but you also protect yourself from any collateral damage.

Lack of innovation is often a key reason for business failure.  Hence, we can draw a link between lack of innovation and increased business risk. When you outsource, your expenses decrease which in turn reduces your fear of failure, which leads to more experimentation and thus innovation. Thus, outsourcing also minimizes your risks from a strategic point of view.

4Quickly Scale Down

When you hire remote staff you no longer have any of the following:

  • Stringent Labor Laws
  • Long-Term Contracts
  • Redundancy Packages
  • Fear of Getting Sued by Your Staff

Offshoring enables you to instantly scale down should you need to do so. If your sales drop, you don’t keep hemorrhaging expenses, unlike what might happen if you hire locally.

5Vetted and ‘Double’ Accountable staff

When you hire an employee locally, you don’t have any track record with that individual. In contrast to this, when you hire a Virtual Employee, the outsourcing vendor is putting forward an individual who may have several years of experience with that firm already. Naturally, the outsourcing company is only going to retain staff if they have successfully worked with their clients in the past. Hiring a Virtual Employee is a highly vetted approach.

Not just this, should you at any point find yourself unhappy with your Virtual Employee, you can ask the outsourcing vendor to intervene on your behalf. Not only is the employee accountable to you, but so is the vendor you have hired the Virtual Employee from. You have a ‘double’ form of accountability when you hire Virtual Employees. By contrast, if you hire an employee locally and you are unhappy with the individual’s performance, there is no one you can turn to or hold accountable; you have to manage the situation by yourself.

Outsourcing is clearly highly misunderstood, and outsourcing risk is just one example of this. Where most see outsourcing as a risk, the reality is altogether different. Just because you have a concern, it does not mean that you are at risk; it is possible that your concerns are entirely unfounded. The above outsourcing advantages are clearly very powerful. They provide an unprecedented level of business flexibility, simply unimaginable locally.

However, in the video clip at the beginning of this post by Malcolm Paice, the COO of Keystone Employment Group, he says, “It (VEs) removes the risk of that sense of being held to ransom by an external third party where you can end up in a battle with the supplier that hasn’t delivered what you thought or what they promised to deliver at a very high cost.” What does Malcolm mean by this? How do Virtual Employees reduce your risk over project outsourcing? This is something I shall deal with in my next blog post.

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