Risks in Outsourcing

Filed in archive Best Practice on August 20, 2006

One of the things that you need to understand in outsourcing is that there are risks. These risks, if not managed well could break your outsourcing ventures thus converting you as one of the people who equates outsourcing as a thumbs down sign.

In order to manage these risks well, the first thing that you need to do is inform and educate yourself regarding the different outsourcing risks in outsourcing. Ravi Aron, Wharton Professor of Operations and Information Management has identified three different kinds of risks when dealing with Business process Outsourcing or BPO. Here are the three kinds of risks:

3 Kinds of Risks:
Operational Risks - this risk could pertain to the quality, cost or speed when it comes to executing the process.
Strategic Risks - this refers to sensitive issues like IPR, security, and privacy.
Composite Risks - this kind of risk pertains to "longer term risks" like the incapability to execute business processes in house due to lack of talent or supply.