One of the most common reasons companies outsource their employees is to avoid certain costs or cut expenses. Meanwhile, some others choose doing it to meet their strategic objectives. In 2018, Statista revealed that the global market size of outsourced services is at $85.6 billion, while in 2019, it reached approximately $92.5 billion. Among this amount of investment, however, as many as 50 percent of outsourcing deals end badly due to the wrong partner and inability to manage supplier relationships.
Talent outsource involves handing over direct control over a business function or process to a third party. As such, it can come with certain risks, such as when outsourcing, you might experience problems with service delivery, confidentiality and security, lack of flexibility, management difficulties, and instability as you do not have the entire control over some processes.
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What to consider when outsourcing talents?
As outsourcing can pose a great risk for businesses, it is wise to calculate the pitfalls before handing out your business outsource management to a third party. Here are five questions HR and line managers should consider before doing a partnership with an outsourced third party.
- Why should your businesses adopt outsourcing? Does the key function being outsourced need to be controlled directly to ensure its future competitiveness? If yes, then remember that outsourcing with the third party will not give you full control over what you are doing.
- What are the costs of not doing outsourcing? Will your business suffer from not investing in it? Remember to also calculate the hidden costs of outsourcing and in-house training, such as office space, staff costs and return on investment.
- Can you find a trusted and reliable outsourced partner yourself? Or do you need a consultant to help? If you need a consultant, there might be additional costs to hire a consultant. However, a consultant can also come from in-house employees such as a credible HR manager or leader.
- Are you prepared to manage an outsourcing relationship? Outsourcing is not a one time task. It is a continuous partnership under a contract between an employer and a service provider. Thus, along the way, there might be problems and incompatibilities. Are you ready for this?
- Do you have a plan to eliminate problems that might arise? Last but not least, HR and employer should consider this question before agreeing with an outsourcing contract. For example, your current outsourced partner might not be able to complete a task, in this case, you might want to consider having other service providers that you can turn to relatively quickly. Hence, before signing the contract, make sure there is a clause stating that you are able to make such changes when a problem arises. If not, you might lose additional cost due to violating the contract and the outsourcing company could claim compensation for it, NI Business Info suggested.
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