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Top Challenges Faced In IT Outsourcing Industry

August 9, 2017 6:11 pm Published by

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Outsourcing emerged in the industrial revolution but has become a supportive and a full-fledged business strategy. Though outsourcing began with the manufacturing sector and now has paved its way to hospitality, banking, telecommunications and to a major extent in IT.

The best part of outsourcing is that it focuses on core activities by passing on the additional work to other suppliers rather than completing it internally. This leads organizations towards considering outsourcing for its non core activities.

Ralph Welborn, a business advisor and author, says, “At its core, the outsourcing industry rests upon an old business model based on inflexibility and cost reduction that doesn’t account either for the predictable patterns of technology adoption or for the demands customers face for providing more ‘value’ and ‘service’ rather than simply reducing costs for their customers.”

The importance of outsourcing is slowly rising in our current generation as more companies now depend on outsourcing their various important functions in this day and age of internet and constant communication.

Challenges Faced In IT Outsourcing Industry :

  • Employees Not Hostile To Change:

People are not prone to Changes; they generally try to avoid the circumstance that invite changes. If asked for the change to introduce, employees of the organization might not be in the favor of the idea of an outsourced IT support system and that will show up either passively in their productivity levels or aggressively in form of resistance in everything.

  • Outsourcing Might Look Good But The fact varies :

Outsourcers try to bind the clients in the long term deals based on contracts. The contracts contains terms and conditions mostly based on the pricing that would expire within the period of next six months. This all would result in mere frustration, irritation and a lack of understanding and insight into why the sales promises of outsourcing aren’t meeting up with its delivery realities.

  • A lack of transparency:

The providers do not follow the transparent approach. They follow the “black-box” approach for the costs and price margins. Some may conceal their overall margins to keeping themselves at  more profits over the life of the contract. They provide the wide range of services to the client such as application development, solution deployment and project management, all stranded to lots of change orders in the complex which is hard to understand in straight way. As different services have varied costs and margins, a provider can use — or claim to have used — the ones that offer the most benefit.

  • Consequences Of Contractual Crunch and Win-Lose Contracts:

The process of Outsourcing has witnessed very stiff competition in the market. People associated with the outsourcing are leading to “win-win” stage. They want their win and approach for the contract negotiation. In the short term, one party wins and the other one loses, but in the long run, everybody is at loss, because of the animosity, frustration and bad-mouthing that stem from such a partnership.

  • Selection of Outsourcing Partner:

To choose a partner for your outsourcing business is very hard. It is the next challenge faced by most companies, the reason being the tough competition involved and every vendor claiming to lead the others in the stream. Any errors in the selection process can cause loss in the long run. So, be careful while choosing your partner.


The outsourcing issue will be argued back and forth until IT is no longer relevant. I have seen its effects from nearly every side and rarely does it work as well as those initiating the process would hope. Of course, it’s not a completely flawed system. But a lot of issues get overlooked when the idea of saving some salary comes to mind. Choose wisely where outsource software development company as your dollars are spent. The returns could make or break your company.

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