Productivity Gaps

A critical thing to remember is that outsourcing is a change in the way you do business. When things change, there is an interim adjustment period that requires significant attention. If this period is not managed correctly, the initiative can fail quickly. With this in mind, the outsourcing contract will specify a learning curve and take over. For example, a company may have outsourced to improve customer service. However, service levels may get worse if the transition process is ill defined. While expense reduction may have been the goal for outsourcing of processes, transition costs would offset initial cost reductions. The risk lies in not containing costs and process burdens within budget and in forecasted time frames.