When you’re used to doing everything for your business on your own, the idea of outsourcing can be incredibly daunting. How can you find reliable contractors? How do you know you can trust them with your business tasks? And how can they possibly do things as well as you can? All of these fears are valid, and there are risks of outsourcing. Everyone wants to scale their business and continue to grow. To do that, though, most people have to start off-loading some of their more tedious and time-consuming tasks.
What you’re trying to do here is save time, not make more work for yourself. And let’s be honest, posting jobs, conducting interviews, onboarding staff, and doing trials can be extremely time-consuming, not to mention risky.
What Are the Risks of Outsourcing?
The following are the biggest risks when you outsource:
- Limited Oversight – Companies lose control of workflows and processes.
- Weak Internal Management – Bad internal managers cannot onboard remote assistants properly, leading to inefficiencies and wasted resources.
- Data Insecurity – Sharing company data can make a company more productive but also makes it dependent on a third party.
- Miscommunication – There could be gaps in how remote assistants receive messages, especially if they are new or unfamiliar with local culture.
- Bloated Budget – Service providers might not be transparent with the full cost of their services, leading to more expenses.
- Delays in Output – Inadequately trained assistants might finish tasks slower than expected. Natural hazard events like storms can also cause power interruptions.
- Provider-Related Setbacks – Assistant turnover, length of time to source VAs, provider system maintenance, and similar incidents could slow down productivity.
- No Future-Proofing – Companies must be sure of the direction of their business. Cost reduction through outsourcing risks sacrificing future critical competences.
- Security Threats – Outsourcing may expose a company to malicious online actors.
- Inexperience – Assistants new to the industry, or professionals new to virtual assistance could be slow to complete tasks.
Delegating to a remote employee carries a certain amount of manageable risk. What if you put in the energy to hire someone, and it doesn’t work out? Conversely, what if you forego getting a VA, and miss out on the benefits?
If you use a service like Wing Assistant, you get the benefits of full-time employees with a lower amount of risk. You tell us the tasks you want to outsource, and we match you with an experienced, dedicated assistant who can take care of them.
There will always be some risks in the outsourcing of services, regardless of how you go about it. But there are ways that you can minimize and manage the most common ones.
Limited Oversight
Outsourcing comes with a major risk—losing control. When you shift a once internal task to an outside agency, control diminishes significantly, and if the service provider mishandles it, the quality of the outsourced service can be compromised.
The risk intensifies if the third party mishandles the outsourced tasks. Poor management or execution by the external entity could potentially impact the quality and efficacy of the service being outsourced. This could lead to delays, errors, or a general decline in the standard of the service provided.
Moreover, the level of control varies based on how far away the vendor is located. Greater distance means fewer face-to-face interactions, relying more on virtual communication. It can also complicate collaborative efforts, especially when working with offshore vendors in different time zones or regions.
Mitigating the Effects of Limited Oversight
Outsourcing can feel like handing over the reins, and sometimes it can make business owners feel like they’re losing control. If the outsourcing partner slips up, it could affect the quality of the work. Quality control can be even more of a concern when working with offshore teams, given the location and time zone differences.
Keep things running smoothly by having clear and comprehensive service agreements (SLAs) that lay out expectations and quality standards. These agreements act as a guide to keep third-party providers accountable.
Additionally, using effective project management tools keeps everyone in the loop, no matter where they are located. Technology enables constant communication and bridges the gap between teams.
Regular check-ins and evaluations of the work will also help catch problems early and address them promptly. Build a strong and collaborative relationship with offshore partners through regular meetings. Your involvement will foster a sense of shared objectives, which helps outsourcing partners take ownership of projects.
Weak Internal Management
Sometimes, internal managers struggle to define clear objectives and expectations for outsourced tasks. This lack of clarity can lead to misunderstandings, missed deadlines, and overall project failure. Since communication is crucial in outsourcing relationships, a manager who struggles to convey information in an accurate and timely manner could inadvertently cause misunderstandings, poor collaboration, and delays.
Monitoring the quality of outsourced work is crucial, but weak managers may not have the tools to implement robust quality control processes. They might also fail to connect outsourcing decisions to broader strategic goals, resulting in disjointed efforts.
What to Remember About Vendor Management
Note that these challenges are not exclusive to weak managers, and even strong leaders face difficulties with outsourcing. Successful outsourcing requires careful planning, effective communication, and a strategic approach, regardless of a manager’s perceived strength.
Data Insecurity
Offshore outsourcing usually means sending sensitive data across borders. During this process, the data could be at risk of interception or unauthorized access, especially if it doesn’t have the right encryption and secure communication channels in place.
Offshore workers might also store data on servers housed in locations with lax protection laws and security standards. If third-party service providers don’t have strong security measures in place, it raises the risk of data breaches.
Controlling who can access sensitive data is crucial for security. In an outsourcing scenario, ensuring proper access controls and permissions can be challenging, and weak access controls may lead to unauthorized access.
Reducing Data Insecurity when Outsourcing
Mitigate data insecurity by prioritizing encryption during transmission. Ensure that all data sent across geographical boundaries is encrypted using robust protocols. This ensures an added layer of protection, making it significantly more challenging for unauthorized parties to access or intercept sensitive information.
Another effective measure is to thoroughly vet and choose reputable third-party service providers. Prioritize providers with a proven track record in data security, like Wing. You could also request information about your provider’s security protocols. Opting for providers with strong security measures minimizes the risk of data breaches and ensures that your sensitive information is in capable hands.
Finally, establish clear and comprehensive contracts that explicitly outline data security requirements. Expectations of encryption standards, storage protocols, and access controls should be outlined in your contractual agreements.
Doing this sets the foundation for a secure outsourcing arrangement. Regularly review and update these contracts to stay aligned with evolving security standards and technology, reinforcing your commitment to data security in the outsourcing process.
Miscommunications
One of the most significant risks of outsourcing work is a breakdown of communication. After all, when you were completing all your business tasks yourself, you didn’t need to report back or communicate with anyone.
With a bad virtual assistant service, there could also be gaps in how messages are received. The VA might not be familiar with idioms, for example, or grasp cultural norms. These could cause misunderstandings.
Not having effective communication with your assistant from the start will lead to dissatisfaction for both parties.
Managing Miscommunications
By establishing ground rules and making communication strategies clear, you can save a lot of headaches down the line.
Provide business hours
You may not be running a “traditional” business, where staff works in an office 9-5, but that doesn’t mean you shouldn’t have business hours. Don’t expect to be able to reach your assistant 24/7. You wouldn’t want them trying to contact you in the middle of the night either.
Business hours will dictate when you will be available and online to communicate with each other and hold you both accountable. They can ask you during business hours if they have a question and know you’ll respond right away. Similarly, if you need to jump on a call with them to discuss a project, you know they will be available during that set time frame.
Set norms for communication
Get clear on how you will communicate with those you outsource work to. Pick a format and stick to it. You can use Slack, email, Discord, Microsoft teams, or directly in your chosen project management software. The method you choose to communicate is up to you, but make sure that everyone is on the same page. If you have messages coming in from multiple different streams, then you’ll be more likely to miss something.
Have procedures for escalating concerns
It may take some time for your employees to get familiar with the tasks you’ve assigned them, but soon everything will be running like a well-oiled machine. In the meantime, there could be concerns on both sides. Maybe you feel the assistant is under-performing, or they may feel that they aren’t receiving the support they need.
Either way, you’ll need a procedure for escalating concerns so that everything is done in a professional and organized manner, allowing you to deal with problems effectively. For example, you can create an escalation form that can be filled out anytime there is an issue.
Brief the provider or set the context
No employee can do their job if they aren’t told how to do it properly. Don’t assume that they will just pick up where you left off and perform to your standard. Be hyper-specific when creating briefs and explaining tasks. And have your new hire repeat this back to you to ensure they understand.
Bloated budget
You know that it will cost you money to start outsourcing work, but it’s also going to enable you to make more. That said, the last thing you want is a bloated budget where you end up spending way more than you anticipated on outsourced work.
Outsourcing could bring with it plenty of hidden charges. A reputable company will be transparent in pricing, but a bad service provider might hit you with fees that you didn’t think you had to pay. Regularly spending more than what you thought you would is unsustainable in business.
Managing your budget
Getting your finances in order is one of the most important parts of keeping a business afloat. Here’s how you can avoid one of the biggest risks of outsourcing.
Define the project requirements
If you want to avoid hidden costs and stay within budget, you need to get specific about your project requirements. Make a thorough breakdown of the deliverables required, including even the smallest sub-tasks (even better if you can provide an approximate amount of time that you would allow for the tasks). This way, you’ll receive an accurate quote for the project and know exactly what you’ll spend ahead of time.
Find out if the provider has the right equipment
Another surprise you don’t want to get is finding out you’ve hired a provider who doesn’t have the right tools, equipment, or technology needed to complete the tasks. You might hire someone based on their hourly wage, which fits your budget. But then you have to spend more to purchase the software they need to do the job. For example, maybe you hire someone to edit copy for you, but they don’t have Grammarly Premium. They will likely want you to cover that cost.
That’s not to say that providers are expected to cover the costs for these specialized tools themselves; it’s just something to be aware of so you can build it into your budget.
Delays in Output
When you start outsourcing work, you become a manager by default. Although you’ll have freelancers, contractors, or employees completing tasks, you will still need to manage the timeline of these tasks and ensure that everything stays on track.
How to streamline project development
Your new hires will be looking to you for accountability, motivation, and guidance. Maintaining control and empowering third-party providers is the ultimate goal.
Set goals for the provider
One of the first things to do when developing a new project is to set goals for your provider. Having tangible goals in place will enable you to reduce risks related to inconsistent output.
Goals also let you measure your provider’s success easily and determine precisely where they are at in each project. You can build these goals into a project management software like Asana, Trello, or ClickUp, where you can check in on their status without wasting time communicating back and forth.
Track key performance indicators
KPIs are crucial for measuring your providers’ performance against your goals. They help you to understand how you’re benefiting from outsourcing tasks and ensure that the investment is worth it for your business. Key performance indicators also motivate your contractors by giving them specific targets to reach and keeping them on track. An example of a KPI you could set for your assistant might be to respond to all chatbot inquiries within 24 hours or something similar.
Set timelines for meetings
Meetings are points when you and your providers can check in to discuss project requirements, tasks, and progress. Set timelines for meetings as soon as you begin outsourcing tasks so that you and your providers can plan ahead and come prepared with questions, updates, and feedback.
Provider-Related Setbacks
When there’s a mismatch in provider and client processes, it can lead to inconsistent quality of work, impacting the company’s overall performance and reputation. Timeliness is key, and if outsourced professionals face challenges meeting deadlines—whether due to resource constraints or inefficient processes—it can disrupt workflows, affect project timelines, and potentially cause financial losses.
Beyond concerns related to quality and timeliness, infrastructure inadequacies pose a significant setback. In the outsourced location, poorly prepared infrastructure for handling storms, power outages, and unforeseen events can disrupt operations and lead to project delays. Natural disasters or infrastructure failures may result in a temporary loss of connectivity, hindering communication and project progress.
These infrastructure-related challenges also contribute to data security concerns. Power outages or disruptions increase the risk of data loss or corruption, posing a potential threat to the confidentiality and integrity of sensitive information that outsourced professionals handle.
Mitigating the Effects of Provider-Related Setbacks
Robust infrastructure resilience means having backup plans for backup plans, from redundant systems to backup power sources and more. Taking on provider-related challenges is key to a resilient outsourcing strategy.
Agreements with a provider could include clear escalation protocols, reporting commitments, defined responsibilities for data recovery and the like.
Establish Procedures for Disasters and Disruptions
In the event of a disruption, both parties should agree to a clear escalation protocol. This includes designated points of contact and a step-by-step guide for communication escalation to swiftly address and resolve issues.
To keep everyone in the loop, the service provider will commit to promptly reporting any disruptions to the outsourcing company. This ensures transparency and enables both parties to collaboratively strategize and minimize the impact of unforeseen events.
Data Recovery Plans Should Be in Place
Clearly defined responsibilities for data recovery will safeguard data integrity. This encompasses regular backups, secure storage practices, and a well-documented process for restoring data in case of any loss or corruption.
By incorporating these or similar clauses, the service agreement becomes more than a legal document—it becomes a dynamic guide that actively supports collaboration and resilience in the face of unforeseen challenges.
No Future-Proofing
When diving into outsourcing, it’s essential for companies to have a clear vision for the road ahead. While cutting costs through outsourcing is a common goal, there’s a potential downside: the risk of letting go of critical capabilities that could be vital down the line. It’s like a balancing act, where the lure of short-term savings needs to be weighed against the long-term strategic needs of the business.
Future-proofing is the name of the game here. It’s about staying ahead of the curve, anticipating changes in the business landscape, technology, and market trends. While outsourcing can bring immediate operational benefits, it’s crucial not to lose sight of the bigger picture. It’s not just about what works today; it’s about nurturing and keeping the core strengths that will be the driving force behind future success.
In simpler terms, don’t overlook future-proofing. Yes, cost-cutting matters, but so does ensuring that the skills and strengths you’ll need tomorrow are still firmly in your toolkit. It’s all about finding that sweet spot where you save money today without selling yourself short in the long run.
How to Future-Proof your Outsourcing
Navigating outsourcing’s dynamic landscape requires strategic resilience. To future-proof, adopt a multifaceted approach: selectively outsource tasks, ensure flexible contracts, and diversify service providers. These actions fortify your strategy, streamlining operations today while laying the foundation for sustained success.
Be Selective About What You Outsource
To tackle the challenge of future-proofing, it’s smart to be a bit picky about what you outsource. So, the move here is to choose wisely when deciding which functions to hand over. Why? Simple – pinpoint tasks that are non-core or kind of repetitive. This frees up your in-house team to really dig into developing and holding onto those core competencies that are like gold for future growth. It’s all about finding that balance – streamlining certain tasks through outsourcing while keeping your ace in-house team focused on the stuff that truly sets your company apart.
Create Flexible Agreements
Flexibility is the name of the game when it comes to future-proofing through outsourcing. Here, the trick is to weave flexibility clauses into your outsourcing contracts. Why? Well, life and business change, right? These clauses give you the power to tweak the scope of work or toss in new requirements. It’s like future-proofing your contracts, making sure they can roll with the punches as your company’s needs shift. By building in this flexibility, you’re essentially setting up a contract that’s more like a living document, ready to adapt and grow along with your business.
Diversify Your Service Providers
Another savvy move for future-proofing is spreading the love among different service providers. What’s the deal? Well, don’t put all your eggs in one outsourcing basket. The action here is to steer clear of leaning too hard on a single service provider. Why? Because having a mix of providers gives you flexibility and cuts down on the risk of being left in the lurch if something goes sideways. It’s like having a backup plan for your backup plan. By diversifying your outsourcing partnerships, you’re creating a safety net that keeps your strategy solid even when unexpected curveballs come your way.
Read More About Outsourcing
Security Threats
Other significant risks of outsourcing involve business security. Online businesses should be proactive about protecting themselves online, since malicious actors have a wide array of tools at their disposal.
When you’re operating your business on your own, you’re the only one who has access to sensitive business information and passwords to accounts. You’re solely responsible for your cybersecurity protection and have ultimate control over the management of all your accounts and information.
Preventing security risks
When you hire someone, you will inevitably need to provide them with access to accounts such as software tools, email accounts, and maybe the backend of your website. But you can work to mitigate cyber threats by following some of these steps:
Educate providers in basic cybersecurity
Your providers may not be cybersecurity experts, but that doesn’t mean they can’t learn. There are obvious threats to consider, such as phishing scams and social engineering attacks. Provide your new hires with resources as part of the onboarding process where they can read about the basics of cybersecurity and how to identify red flags. Talk them through common cybersecurity issues that you may have encountered in your business in the past so that they are prepared if one comes up again.
Limit providers’ access to critical information
Don’t give unlimited access to all your business’s critical information. Only provide your staff with access to the information they need to complete their tasks. Leave sensitive documents or information password-protected so that only you can access them. Whenever possible, set permissions within tools or software platforms so your providers can’t mess around in anything they aren’t supposed to.
You might have to do a full audit of your systems and storage before onboarding new staff to ensure you’ve hidden things like payroll records or tax information before giving them access. Also, don’t forget to disable privileges entirely if they stop working with your business.
Ask providers to sign a non-disclosure agreement
Another way to protect yourself from the risks of outsourcing is by getting the law on your side. Always cover yourself by having all new providers sign a non-disclosure agreement. An NDA is a legal document that ensures your business information is protected and kept confidential by your providers. If a provider violates the NDA, they can be legally penalized.
You can include any information that you deem confidential in your non-disclosure agreement. That is totally up to you. But make sure that it’s super clear so that nothing is misunderstood. For example, are providers allowed to discuss the work they do for you with other potential employers? Or is it okay if they are transparent about their work; you just don’t want them sharing your sales data?
Having providers sign an NDA will give you peace of mind that all your information is secure and confidential.
Assistant’s Inexperience
If you are in the process of growing your business and just beginning to outsource work, then it’s unlikely that you have a huge budget to hire talent. That means that you may not have access to top-tier talent and could be working with more entry-level providers.
Managing lack of experience in providers
That’s not to say that less experienced assistants still can’t do a good job; you may just need to provide them with more guidance. While lack of experience in providers is one of the risks of outsourcing, it is also a huge opportunity for growth.
Specify how they could improve
If your providers are underperforming and not meeting your standards, don’t assume that they will just figure it out or fix things independently. No one sets out to do a lousy job, but providers won’t know what they are doing wrong unless you tell them. Instead of getting frustrated with them and saying their work is no good, specify exactly how they could improve. Say, “instead of doing things this way, you could try doing it like this” or something similar. This will save both you and your provider time and help them complete work to your expected standard.
Appreciate great effort
When your provider goes above and beyond or does a great job on a task, tell them! We all want to feel that our hard work is appreciated, and it helps boost overall morale. Once you’ve got a great service provider, you want them to stick around. Showing appreciation for your employees is one of the best ways to increase retention and ensure they continue working with you.
Have check-ins regularly
Schedule regular check-ins with your providers to make sure that everyone is happy and on the same page. Give your providers space to voice any concerns, ask any questions, and let you know how they are feeling about the work overall. You can also use these check-ins to give them feedback on their work, discuss future projects, or let them know about progression opportunities.
Manage the risks of outsourcing by working with trusted providers
Using all these tips and tricks, you can help mitigate the most common risks associated with outsourcing work. The key is working with a reputable provider that you can trust and who you feel confident can handle the tasks you assign them.
There will always be an element of uncertainty when hiring providers on freelancer websites like Upwork, Fiver, or Freelancer.com, which is why your best bet is Wing. Have access to a managed, trained, and dedicated assistant who is vetted and ready to complete all your business tasks. Get started with a Wing Assistant today!
Kandice is a content writer & strategist with over 5 years of experience in digital marketing. She specializes in SEO-optimized content for the SaaS and tech industry. She’s a digital nomad, currently based in Mexico, and is passionate about helping other business owners and freelancers increase their productivity when working remotely. When she’s not behind her computer you’ll find her at the beach snorkeling, playing volleyball, doing yoga, or cooking up a delicious vegan meal.
