We can’t run away from the fact that outsourcing is a huge and still-growing industry by itself. Just like banking is broken down into various specializations (savings, wealth management, investment banking and a lot of other things), so too can outsourcing be seen as one large jigsaw puzzle with many bits joining up to make a large picture. It’s an ever-shifting picture though, with new parts being added, some old ones being replaced and so on. And because of this somewhat fluid nature, myths tend to build up around it. Let’s focus on just 10 in this space.
1. Outsource = Offshore
Getting the job done by someone else does not mean getting it done somewhere across the seven seas. Not always. There might be companies right across your street, or in the next state, that can do the job you want to be done.
2. It always costs less
Not always! But think of it this way. You want to build a smart, state-of-the-art house that looks great, is earthquake-proof and fire-resistant. It will most likely cost more if you hire an architect/ builder to execute the project than if you did it yourself. What would you rather do, pay an expert to do it well or save your dollars?
3. It’s always low-end
Just like the above mentioned point, what you outsource does not need to be always low-end work, although the bulk of what you might want to farm out when you start outsourcing is exactly that. If the experience is a happy one, most companies entrust the vendor with more complex work in time.
4. Expenses will reduce
Yes, in the long run, but only if you find the right partner. Finding that partner needs A LOT of homework. Deciding upon what you want to outsource also needs A LOT of homework. Documenting every detail of what you want done and exactly how, needs A LOT of work.
5. We will contribute to joblessness
This is just a matter of how you look at your glass of water and perceive it as being half-full or half-empty. True, there is a loss of jobs (in your company) as work moves out of your firm and into another. But do you see, this is like energy, just a displacement. With the savings that accrue to your company, you’ll probably build a new product or offer new services, directly hiring people to do jobs that are more high-end.
6. The economy will collapse
When U.S.-based companies outsource to India or China or Poland, the average US citizen gets goods and services at a lower cost leading to more prosperity and the savings are spent on other areas, opening up new jobs. The economy benefits. Unfortunately, the new jobs created may not be of use to those who lost their jobs and while that is indeed painful, reskilling is an option that optimists are choosing. This is a fallout of the global economy and people in developing/poor countries face exactly the same condition.
7. Outsourcing is not for startups
While large companies have been instrumental in making outsourcing a routine activity, startups have not exactly been shy about wooing “outside” partners. In fact, size does not matter here. There are several permutations and combinations at work: small startup, small outsourcing vendor; small startup, large vendor; large startup, small vendor and so on. Often, startups know exactly what they want from the vendor because they are just beginning a greenfield project. They end up saving huge amounts of time before launching their project.
8. Product development cannot be outsourced
This follows from my previous point about startups. It is absolutely untrue that products cannot be developed outside of your own company. You may have the idea but often the entire design and development is undertaken by a team sitting miles away. Most often, intellectual property rights remain with you but we have seen companies sharing IPR with their development partner, a more evolved form of outsourcing. In fact, there are companies that specialize in product development work and these can range from software products for a range of industries to healthcare devices, from software for entertainment in airlines to the latest range of cancer drugs.
9. There are too many cultural barriers
In the global economy, the only corporate culture is to build your company, take it forward and keep it there. With the internet as teacher, students and workers from every continent are on the same page where information is concerned. Yes, there will always be cultural differences and these need not transform into barriers. Hire a cultural expert if you’re wary to start with and I guarantee you’ll enjoy the diversity.
10. I will/won’t sleep at night
This is a myth that works both ways. Some fear they won’t sleep, others dream they will. Neither is entirely true – and it’s up to you to work out a schedule with your vendor.
As humans, we love myths and are also thrilled to see them busted. Let us know of any myth that you harbor about outsourcing and we’ll be happy to bust it for you!