How to Mitigate Possible Business Risks While Financial Outsourcing?
Indeed, outsourcing is a common practice of leveraging out your business functions and processing to third-party service providers. While doing this, the benefits are not limited to cost-savings and efficiency but also allows the businesses to gain a greater competitive advantage over the crowd.
According to a survey, 90% of the businesses consider outsourcing as a hindrance in their business expansion. On the contrary, 78% of the small and medium level enterprises believe that outsourcing helps their business in growth.
Some of the inarguable outsourcing benefits include:
- Improved focus: While outsourcing your requirements to the service provider, you are freeing up your crucial resources that will result in concentrating on primary tasks and on future strategy.
- Enhanced efficiency: Choosing the specialized outsourcing provider help your businesses achieve more productive, efficient service, and enhanced quality.
- Controlled costs: With greater cost-savings and efficient service, you can invest your resources in other areas of your business.
- Increased reach: While you are outsourcing your requirements, you would be able to access the capabilities and facilities which were otherwise inaccessible or unaffordable.
- Greater competitive edge: You can leverage your existing knowledge and skills in the market with a greater focus on business growth.
While outsourcing your project requirements to a third-party service provider may seem easy to some and not to some, it comes with its pros and cons. Many of the risks of outsourcing can be mitigated with proper preparation and planning, nothing helps more than understanding the potential pitfalls and listing steps for avoiding the same.
- Trust: If you are at the initial stage of considering outsourcing your requirements, then this is the first query that you would be pondering upon. The degree of this trust and belief depends upon the points that the provider can score for risk analysis and mitigation.
- Solution: You can choose the company and its parent organizations upon the following parameters which will help you to judge its effectiveness as per your requirements
- Maturity of the company
- Successful projects and satisfied clients
- Company’s website
- Social Media Activity
- Knowledge Sharing Platforms Participation
- Domain Expertise: Another factor that plays a crucial role in deciding for outsourcing is the company’s domain expertise. As a preference, the business owners can search for security information and certifications mentioned on the website.
- Solution: The businesses need to search for the certifications that the organization has been complemented with and check the importance of the same as per your organization’s needs.
- Lack of Expertise in Remote Teams: Most of the businesses are of the opinion that they don’t want to outsource their needs as they feel the lack of expertise as per the market while working with service providers. Such a situation becomes even more horrendous when you kickstart with an amateur provider.
- Solution: Check the maturity of the company and study the profile of the company so as to understand its efficiency and effectiveness as per your organization and its requirement. If possible and necessary, train your service provider as per your requirements.
- Knowledge Transfer: One of the crucial parameters of choosing to outsource is knowledge. The first one is to deliver everything from scratch to hatch. Another technique is to deliver the partial product i.e. only the know-how and not as the publisher of the data.
- Search for the financial service provider with state-of-the-art capturing business processes.
- Lookout for the service provider creating an innovation road-map of the knowledge transfer process.
- Confidentiality and Security: When you outsource, you delegate your resources and infrastructure to the service provider. In detail, you hand over your sensitive data, processes, and other similar information to the third-party service provider.
- Solution: Look out for the service provider working with international standards and complying with the same. To help you find a reliable outsourcing company, you can try using the Australian Business Register. Also, the businesses need to check the portfolio of the service provider they are hiring for their requirements.
- Hidden and Uncertain Costs: Just imagine that your outsourcing partner has suddenly demanded new overhead charges, modifications, and adaptations during the service period. In this way, the overall outsourcing cost is bound to skyrocket and will ultimately affect your revenue generation.
- Identify your current needs and future needs which can possibly occur in your needs. This will help you negotiate for the right cost.
- Conduct through a risk assessment followed by close monitoring and then final implementation.
With meticulous planning and proper execution of the same, these outsourcing risks can be easily averted. The planning and execution may get tedious at times, but outcomes should be close to your expectations. With the tight plan, you can overcome even the gravest of the process risks with positive results and beneficial outsourcing.