Overcoming the risks of offshoring

Almost every offshoring plan brings some difficulty or complication in the early stages. However, these risks can be dealt easily if well managed.

Without a doubt, offshoring offers many benefits for Australian startups and small businesses. There are, however, associated risks of offshoring that must be considered when working out whether to add an offshore staff component to your team.

The risks include both legal and cultural aspects. Here are some of the key issues I think any SME should consider before offshoring:

Data security: Data location and security is a key concern, whatever your line of business. It’s important to develop a data security and location plan from the outset. This should cover where the data will be stored, levels of access, physical security measures within the facilities, contractual arrangements and consequences of data theft.

A related risk is protecting intellectual property: Protecting existing intellectual property rights and ownership are important issues to consider for both your local and offshore team. We advise clients to have staff sign a Deed of Confidentiality and Assignment of Intellectual Property, including a confidentiality clause. This assigns ownership of all IP created during employment to their client and stipulates that they will take reasonable steps to achieve the legal assignment or registration of that IP if required.

We also suggest only giving staff access to information that is directly relevant to their role, and equipping offshoring facilities with entry and exit biometric scanners and security cameras to help protect client IP.

Dealing with staff concerns: Good management and communication is vital when you plan to offshore team roles. Local staff can feel their job security is under threat. Communicating about what will happen is crucial to staff morale and engagement – of both your onshore and offshore teams!

We work with clients to develop a staff communication plan and help them set realistic expectations from the outset. A good place to start is by offshoring staff roles that will free up bottlenecks or that will add additional resources to existing teams, and put in place clear KPIs for local managers around the offshore team’s success.

It’s best practice to provide training for both local and offshore staff to help with mutual understanding and respect.

Cultural differences and misunderstandings: Subtle differences in culture and understanding can cause difficulties unless handled with care. This is a two-way street, since both your onshore and offshore teams need to understand and communicate well with each other.

Try to include face-to-face meetings and video conferencing as well as telephone contact, to build understanding and to align expectations.

Clearly documenting roles, KPIs, timeframes and expectations and where possible map out processes and systems to be used (especially useful for repetitive tasks).

Quality briefing and regular updates and communication channels really help.

Managing expectations: Set achievable time frames and deliverables – this helps to support staff, customer and supplier relationships during the rollout phase.

Almost every offshoring plan brings some difficulty or complication in the early stages. However, these can be dealt easily if well managed. Using an offshoring company with knowledge of both offshoring and your industry can help, because industry insights can avoid costly mistakes.

Angela Vidler, CEO, Diversify

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