Outsourcing refers to involving an external company or person to accomplish certain tasks related to the non-core areas of a business, such as customer care, web development, etc. Every task outsourced has a certain amount of outsourcing risk. All companies have their forte in their particular area of expertise and relegating certain tasks not essential to the development of the business to another company is the basic principle of outsourcing. For instance, it is easier for an architectural firm to hire a financial services provider to take care of the payroll and billing operations rather than use its own manpower in doing so.

However, if the outsourcing risk is not taken care of, it can prove damaging to your organization. The first and foremost risk is the concern regarding the credibility of a company and whether or not it will remain in business for the duration of your project. Piracy is rampant in many countries and one needs to take that factor into account as well while researching the credentials of a service provider. If possible, visit the company where your project is being outsourced and research the their history thoroughly.

Another main outsourcing risk is that a company runs the problem of hacking by the service providers who are often privy to the confidential data of a company like details of the clients' accounts and their dealings. There have been many cases regarding hacking of a company's confidential data by unethical service providers. This is something that cannot be foreseen beforehand and can only be prevented by researching the credentials of the company thoroughly and having a sound contract.

One major outsourcing risk taken by companies is related to a lack of a contingency plan in the case of failure of the provider to complete the project in the stipulated time. Many companies commit the oversight of not having a fall-back option in case there is no timely delivery of services. Thus, it is imperative to have an option in case the service provider fails to deliver on time.

It is also very important to take into account the culture of the country such as the religion, accent of speaking, manner of dressing and various other trivialities that might not seem significant but give a lot of information on the working culture of the country that invariably translates into the mode of working of the company. Based on this knowledge, you can analyze possible barriers and take the required steps to remove them. For example, many companies conduct accent training and cultural education programs before outsourcing the project to familiarize the employees with the culture of the country they are working for.

Outsourcing is a viable option for companies which reduces the expenditure and, in the long run, makes a great impact on cost savings and the quality of the services delivered. But it should only be done after a complete research of the company and doing your homework of the outsourcing riskexceptionally well before deciding to outsource business processes.