Risks Of Outsourcing

Outsourcing can be practiced both locally and globally where global outsourcing involves acquiring services from foreign companies.

The outsourcing pattern is turning out to be more regular in data innovation and different commercial ventures for administrations that have for the most part been viewed as natural for dealing with business.

Below are the top ten risk factors to consider when outsourcing to a foreign company.

a. Incompatibility of firms status

One may outsource to a foreign company unknowingly of the current technology which they do have currently. On the premises here one may realize that the technology used in the company is outdated as per the technology needed to be outsourced.

b. Transmit risks factors

Outsourcing to a foreign company means that, both companies do interconnect their network, where there is a transmission risk involved since the longer the network distances, the higher the chances of weakness in the network.

c. No international laws governing inter-nations outsourcing

None of the international laws is viewed to be providing adequate protection for the outsourcing. This means that, if there is any disagreement between the outsourcing parties, they both have to find their way of settling their dispute such as going to court or solving their matter through talks.

d. Industry initiatives

Without sufficient global outsourcing administration, industry on-screen characters are setting up their particular structures and principles and thus each industry have to find its way of administering their outsourcing.

e. Mitigation of risks

IT outsourcing connections is described by vicinity and trust which means that, even though there is trust, a given company is not aware of why the other is outsourcing from them where the real intention can be to connect their networks to increase the probability of hacking their data and resources.

f. Business outlooks risk

The foreign company offering the outsourcing services may be excellent at adapting technological changes, where the corporation they are outsourcing to may be very slow in improving their technology. This means that the company offering the services have to be dragged behind where the technology is forcing them to develop.

g. Transaction and operational risk

If the foreign company being outsourced to doesn’t know the outsourcing requirement for their computers, then the company offering the outsourcing services may find it difficult to work with them while they have already invested in working with them.

h. Confidentiality of information

Outsourcing does allow another organization access one’s data and thus by these the group being served may lose some of its crucial information to their competitors through the outsourcing

i. Business continuity risks

Outsourcing to foreign industries means spreading the risks which can lead to industry closure over the world, which means continuity of the industry is not that much guaranteed.

j. The risk of compliance

The foreign compliance or rules may apply to nations, which means that to the nation they are outsourcing to they may not have attained the required standards.


Outsourcing do have both pros and cons, and if a company want to practice it, they must weigh both and look for the option which outweighs the other.