Outsourcing can be a good way to free yourself from time-consuming and repetitive tasks so you can focus on being “in the business” rather than “on” it. Your potential outsourcing partner will help your teams become more efficient in a cost-effective manner. It allows you to focus on your core activities.
Choosing the right outsourcing company can be daunting given the plethora of options available at your disposal. While there are legitimate outsourcing firms in the market, there are also some worth investigating. You need to do your research when searching for an outsourcing company to partner with. In this article, we will look at some red flags you need to watch out for when searching for an outsourcing company.
- Lack of Transparency or No Communication At All
- High Attrition Rate
- They Give You Estimates Upfront
- They Offer Low Prices and Unexpected Discounts
- One Size Fits All Approach
- Innovation Apathy
- Limited Resources
- They Don’t Own Up To Their Mistakes
- They Offer Just A Handful of Services
- Increasing Cost
Red Flags When Hiring An Outsourcing Partner
Hiring an outsourcing partner is not as easy as you think it is. It’s not enough that you meet with them and sign the agreement. There are certain things you need to consider when scouting for an outsourcing firm. Here are some warning signs you need to watch out for when looking to outsource:
- Lack of Transparency or No Communication At All
Effective communication is key to the success of your partnership with an outsourcing provider. There should be clear communication with your partner. They need to know the ins and outs of your business. Once you start working together, there will be concerns or demands that will arise. For this reason, there should be constant communication between you and the outsourcing firm.
As your business partner, they need to make you aware of any issues and take into consideration your business needs. Likewise, they should be on the same page as you. For example, if they understand terms and concepts differently or make frequent references to silent understatements and sudden omissions, that’s something you should be wary of.
Communication should be a two-way street. There should be regular update meetings, phone calls, or if necessary video conferencing. If they don’t respond to your emails, messages, or phone calls, it is a sign that you need to show them the door.
- High Attrition Rate
Another major red flag you should watch out for when looking for an outsourcing partner is the attrition rate. You would want to work with a stable outsourcing partner. High attrition means people are not happy working with the provider which means that management is doing something wrong.
Working with an unstable team is associated with chaos, downtime, and conflicts. High attrition means there is fluctuating service quality due to poor labor policies. Attrition rate means that either your service provider is losing ground in the labor market or your account is not important to them.
If the outsourcing firm you have in mind has a high attrition rate, you may want to reconsider and go for another potential provider. It is best to work with a company that is focused on building long and stable relationships with employees whether in-house or employees to customers. You can be assured of their experience, consistency, and stability.
- They Give You Estimates Upfront
Another major red flag you should be aware of is when the provider gives estimates upfront without developing an understanding of the details of your project. It’s either they do not know what questions to ask or they plan to bury you in change orders once you commit to them.
An experienced provider will usually ask for a minimum amount of information before they give estimates, depending on the level of effort. This is important for them to be able to understand the entire scope of your project. Not asking you questions is not an expression of their intellect and expertise but an indicator of their professional negligence.
So if the outsourcing company wants to start on the project immediately without asking questions, it is a sign that there is something fishy going on. You are better off looking for another vendor to partner with.
- They Offer Low Prices and Unexpected Discounts
One of the benefits of outsourcing is cost-effectiveness. If you are just starting out with outsourcing, it can be understandable to ask for a discount. But if they give you too much discount like 30 percent, that’s something you should watch out for. However, if the price they are offering is way below the average of 10 – 20%, you need to stay sharp.
A reliable outsourcing provider should never agree to operate at a deficit. If they offer you a lucrative discount, the provider could be up to no good. They could be planning to hire inexperienced and poorly qualified specialists or have a short planning horizon.
It is okay to ask for a discount on pricing rates but if the rates they offer seem unrealistic, proceed with caution. Do your research about how outsourcing providers come up with their rates. It is important that you understand how outsourcing providers make money.
- One Size Fits All Approach
Each customer is unique so you need to tailor your offerings according to the unique needs of the customer. Just because the offering of the outsourcing company you have in mind suits the needs of another business does not mean it will suit yours. There is no “one size fits all” when it comes to outsourcing. A survey by IBM entitled “How Organizations Identify and Hire Great Talent reveals that 68% of organizations struggle to find the quality hires they need.
For one the needs of that company may be different from yours. Think about the unique needs of your business and look for an outsourcing firm that offers tailored solutions for your needs. In the changing landscape of the workforce, it is important to develop the right sourcing strategy to ensure that you hire the right person to perform certain tasks.
When sourcing talents, it is not enough to just fill up the positions. Assess your present needs to determine your future needs. You can have the best talent sourcing strategy but if the talent is not there, there is no talent to source. You first need to understand your talent landscape and then attract the talent you need.
- Innovation Apathy
When hiring a provider, you want to make sure that it can be able to implement a certain level of creativity and innovation. You need it to be able to bring fresh ideas and solutions to offer to you. If the outsourcing firm you plan to hire is showing innovation apathy, it is a warning sign that you need to move forward and look for another provider.
The ability to innovate is an indicator of growth. Innovation apathy means that the provider has lost its will and intent to grow or sustain its relationship with customers. There are many signs of innovation apathy you should be aware of– dubious pricing, constant delays, communication breakdowns, and non-delivery are signs of innovation apathy.
Outsourcing is designed to make things easier for you. It should be beneficial for your organization. However, if the partner you have in mind is seemingly not showing interest to help you succeed, it is time to end your partnership with them and look for a new provider.
- Limited Resources
If an outsourcing provider lacks the technical resources to keep you updated or give you a competitive edge, it will only slow down your ability to expand. Also, you may need an on-site team to manage certain processes. You want to make sure that the outsourcing provider can give you the manpower you need for any special projects in your pipeline.
Check the qualifications of the resources that the outsourcing provider will provide for your various projects. Outsourcing can help you increase your available workforce in case you expand. The lack of skilled resources can diminish the quality of your projects. If the outsourcing provider you are currently working with cannot fulfill your manpower requirements, it is a sign that you need to look for a new provider.
Outsourcing is supposed to help facilitate running your business. But if the agency is turning you back but if they are making it difficult for you to do so then ditch that provider and look for another agency to partner with. You can always find a provider that can support your business growth.
- They Don’t Own Up To Their Mistakes
Everybody makes mistakes, even outsourcing providers. But you want to make sure that the outsourcing firm would not only admit or acknowledge their mistakes but own up to them as well. If the outsourcing company makes up excuses or puts the blame on others, that’s another big red flag.
Nothing can be worse than working with a provider who makes a mistake and ghosts you. They may feel uncomfortable or scared to admit their mistakes but if they make a mistake and make a lot of excuses, then you should think twice if you will continue partnering with the provider.
As much as possible, you want to have a smooth working relationship with the outsourcing provider. But if the agency will not take responsibility for their mistakes or has an attitude, then it’s an indication that the partnership is not meant to be.
- They Offer Just A Handful of Services
One of the biggest benefits of outsourcing is that you get access to a wide range of services depending on your need. Whether you are looking for permanent, temporary, or occasional employees, the outsourcing firm should be able to address your current or future needs. Aside from that, the company should also be able to offer other services like benefits administration, worker’s compensation, and other assistance.
Outsourcing companies are called upon to deliver their expertise that will cater to your needs. If the company is not able to provide its services when you need them, you need to be wary of it. Outsourcing is designed to provide you with access to dedicated skills. But if the outsourcing agency cannot offer you that access, then you are better off partnering with another company.
If the outsourcing company is holding you back from delivering customer service because they cannot offer services, don’t think twice about firing them and choose another provider who offers the services you need.
- Increasing Cost
Occasional requests for additional compensation for new services indicate that the outsourcing provider is giving you value for your buck. But frequent requests for compensation for current services is something you need to be worried about. If the cost of the service has already been agreed upon, the outsourcing provider should stick to it.
When outsourcing, you should watch out for additional hidden fees. Most outsourcing companies are using a fixed fee model and clearly indicate their costs on the contract. Thus, if they suddenly charge an additional fee, approach with caution and decide whether to continue the partnership or not.
Outsourcing firms should be transparent about their fees. They should let you know in advance how much you will pay. Make sure to read the fine print and ask about possible situations that will require additional costs. If the outsourcing company is ripping you off your money, it may be a sign that you need to part ways with them.
An outsourcing company is your business partner and hence they should gain your trust. This is important in building a successful business partnership. Being aware of these red flags will help you decide whether to continue with the partnership or look for another provider instead.
Why Outsource with airisX?
Outsourcing is about more than just workload, it is also about skill sets. Through airisX tasks clients can access specific skill sets, such as graphic design, content writing, development and much more on-demand. Additionally, size has very little to do with the ability to outsource, as many of our clients are single entrepreneurs that utilize outsourced staff to multiply their ability, or to allow them time to spend with their family for events, evenings, and vacations.
Unlike other providers, our costs are fully inclusive. We don’t charge extra for seat space, staff salary, benefits, infrastructure, training, HR and so on. Make sure to read your Vendor’s fine print so you don’t get hit with all the hidden fees rampant in the industry. airisX opts to provide a great service for a low cost, without the need to cheat our clients.