What Are the Risks Involved in Technology Outsourcing?

Technology outsourcing is the process of having part or your entire technology functions performed by a third-party organization. You need to consider all risks involved before you fire your technology staff and outsource you technology support functions to reduce costs. A analysis performed by the School of Missouri in 2150 reported that more than 35 percent of the outsourcing arrangements failed. you ) What I recommend is selective outsourcing. Retain enough of your knowledge in-house, outsource what makes sense. fusionex founder

The main aspects of concern are dependency and lack of control, information security and legal issues. Once you fire your entire technology staff and make the switch, it is very difficult to change your mind, make changes or seek a brand new partner. The third party vendor will hold all the playing cards and you no much longer have any in-house competence. They in essence have all the power. The third party vendor can increase fees as contracts terminate in addition to no leverage to negotiate. 

Habbit and Lack of Control – The first thing you loose when you outsource is control. The ability to make becomes the network, systems or any type of technology or service is greatly limited and may need a new contract.

Information Protection – Any emails, documents, client lists, financials, recorded competitive advantages, trade secrets, projects in the works are now in the hands of a third party. Any breach of your data can have severe detrimental impact on your image, company position and financial health. You have not a way to know if the third get together is taking proper treatment for safeguards your data or are cutting their costs. Your data may easily be mishandled, lost or stolen and you may never be notified for fear of retribution. That they may even use sub-contractors which may have no interest in protecting your details and who may see an possibility to make a quick make money from your private data data. This happens more with non-US based organizations especially in India.

Legal Outcomes – The legal outcomes are the greatest menace to an organization that outsources its infrastructure. Just about all outsourcing businesses offer services on a “as is” basis meaning they are not responsible for the results of their services. If perhaps there is a break the rules of of confidentiality, loss of data, the outsourcing organization is not liable.

Fiduciary Requirements – Any fiduciary requirements you will probably have with your clients do not apply to a third party merchant. A careful assessment should be reviewed of the dangers before proceeding with a third party vendor.

Copyright laws Infringement – Copyright infraction is another potential the liability when software is distributed with the outsourced organization.


The things i recommend is selective freelancing. Keep the key knowledge internal and have a local outsourcing firm do the heavy lifting. Get a local credible technology firm that has as much to achieve as you do from the agreement. Speak to as many clients of the third party as possible who are in the same industry and are of similar size. You can always e mail us and we will be happy to give you a free consultation and or point you in the right direction!

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