7 Pitfalls of Outsourcing and How to Avoid Them

Outsourcing is a very effective tool for company of all sizes to cut costs. But when it's done wrong, outsourcing can create negative impact to the company. This article will show you 7 common mistakes when company embarks on outsourcing spree and how to avoid them.


Literature Review
Since outsourcing is fairly simple to execute, so many people don't pay enough attention in planning and controlling it.

Researcher has been preaching about the perils of poor management of outsourcing for years. One of the earliest and most cited articles is called "The Seven Deadly Sins of Outsourcing" by Barthelemy 2003. In 2005, Rosetti and Choi 2005 conducted another research and pointed out some problems associated with outsourcing in aerospace industry called "On the Dark Side of Strategic Sourcing: Experiences from Aerospace Industry" (sadly, one of the biggest aerospace company in the world didn't read this article and has made the cardinal sin in outsourcing). Juras 2007 discussed about this again in the paper called "A Risk-Based Approach to Identifying the Total Cost of Outsourcing", the author extended the work of Barthelemy 2003 in the way that outsourcing risks can be handled as simple as checksheet. Anyway, people tend to focus on short term cost reduction and let the good planning slide.

The recent "reshoring" trend will make no difference because reshoring is one kind of outsourcing, the difference is just where you outsource your products/services, at home country or abroad. Planning can also make or break you.

As a result, this article has gathered 7 mistakes that people overlook time and time gain and simple solutions that will help you break away from vicious outsourcing cycle. I hope you find it something that you can actually use.