Outsourcing can be an excellent strategy for companies looking to save money and remain focused on what they do best. But it’s not always easy – especially if you’ve chosen the wrong business partner.

How do you know if you’ve chosen the wrong partner? A good first step is to keep your eyes open for some of the most common outsourcing red flags. These are often the first signs that you’re not getting as much out of your outsourcing relationship as you could be.

That’s why we’ve created this guide. It covers the top outsourcing red flags so that you can make a more informed decision about whether it’s time to seek out a new business partner or make dramatic changes to your relationship with an existing one.

So let’s get started.

Outsourcing Red Flags to Avoid

We’ll start by looking at some of the biggest red flags that can be symptomatic of problems with your outsourcing relationship.

As you read through these, keep in mind that some are easier to resolve than others, and you may not always need to cancel an existing contract if you’re experiencing one or more of these red flags. But we’ll cover more about that in the next section.

Declining rates of client satisfaction

First, you should look at how your client satisfaction metrics have evolved since you started the relationship with your outsourcing business partner. This is especially important if you’re outsourcing customer service, but will also be relevant for other types of outsourcing as well.

If your client satisfaction rates have decreased recently, that’s often a sign that your outsourcing partner is doing something wrong. Maybe they’re not effectively resolving client problems. Or perhaps they’re making it more difficult for your customers to get the support that they need.

Regardless, if your clients are less happy with your company now than they were before you choose to outsource a part of your business, that’s one of the biggest red flags you can have with your business partner, and is usually a clear sign that something needs to change.

Lack of transparency

Another major red flag is a lack of transparency. Do you struggle to get the information you need out of your outsourcing partner? Maybe they tell you the headlines but don’t give you as much in-depth information as you want.

Regardless, if you’re having a hard time getting the information that you want out of your outsourcing partner, that’s another big red flag. It could be a sign that they’re doing something they don’t want you to know about. But even if it’s not, a lack of transparency can still make it more challenging than necessary to accomplish your business goals.

Poor communication

Our next red flag is poor overall communication. This is slightly different than a lack of transparency, so it’s worth considering it separately.

Poor communication with an outsourcing business partner often means not receiving regular updates. You may get the data that you want from your partner, but it might only arrive once a month instead of weekly. Or perhaps you have a hard time communicating effectively with the leader of your outsourced business unit – even if that person seems willing to share whatever information you request.

When you can’t communicate effectively with your outsourcing partner, it becomes very difficult to get as much out of the relationship as you should. It can be a sign that you may want to consider switching partners, even if you’re not necessarily seeing a decrease in customer satisfaction rates just yet.

Lack of structure

Every business unit needs a clear hierarchy. When outsourced units don’t have clear leaders, it can be difficult to communicate with them effectively, and you may not get the comprehensive insights you need to partner with them effectively.

If your business partner has an unclear structure, it can also be a sign that they’re not running their unit as effectively as they could be. This problem may not be a dealbreaker on its own, but it can often lead to other red flags down the line, so it’s a good thing to keep an eye on as you evaluate your relationship.

Lack of scalability

You should also keep an eye out for resistance to scaling in any outsourcing business partner you strike a deal with. If the partner won’t give you a clear ‘yes’ when you ask

them about scaling, that could be a sign they’re not going to be a good fit for your company long term.

Outsourcing companies are not created equally when it comes to their ability to scale. Some have an easier time finding new talent and expanding office space than others. If you think your company may want to scale in the future, then it will be important to choose a business partner that’s up to the task.

Low-quality service

This red flag goes hand-in-hand with declining rates of customer satisfaction. But it may not always show up in the data.

For example, you may hear anecdotal stories about customers who are receiving poor service from your business partner. It will be important to resolve this situation quickly in order to avoid future problems that do show up in the data.

High rates of turnover

It’s also a significant red flag if you notice that your outsourcing partner has high rates of turnover. Are you always talking to a new supervisor? Or maybe you keep hearing about new employees joining the team even though you’re not actively scaling.

These types of situations are indicative of a poorly-run team. High rates of turnover often speak to management problems that could end up impacting your business somewhere down the line.

Data security concerns

Finally, our last red flag is certainly not the least important. If you have data security concerns with your outsourcing business partner, that’s something you should take very seriously.

Data breaches can cost companies millions of dollars. You can’t mess around with a company that doesn’t take data security seriously. Otherwise, you could end up facing massive charges that could jeopardize both the finances of your company and its reputation with the public.

Steps to take when you notice these red flags

Alright – now that we’ve covered some of the most common outsourcing red flags, it’s time to figure out what you should do when you notice them. Here are a few steps you can take to resolve the situation and get back on track with your outsourcing goals.

Try communicating first

The first thing you should do is try talking to your provider about the problems that you’ve been noticing. Let them know your concerns so that they have the opportunity to respond to those concerns and repair the relationship.

You should also keep in mind that some fixes may take time to implement. You may want to ask for a timeline during this process so that you can evaluate whether that will work for your goals or if you need to begin looking at alternatives.

Be specific about what you need

Next – make sure that you’re specific about what your requests are. What kind of structure are you looking for? What kind of data security issues are you experiencing and how would you like for them to be resolved?

The more specific you are, the easier it should be for your outsourcing partners to fix the problems that you’ve been having. If you’re very clear about what you want and the company still won’t fix the problems, that’s often a sign it’s time to move on.

Start looking at alternatives

If you’ve already tried communicating with your outsourcing partner and haven’t seen the changes that you want, it may be time to start considering other providers. There are many outsourcing companies across the globe, and there’s absolutely one out there that can offer what you want at a budget that fits your needs.

Get in touch with The Cattalyst for support

Are you ready to start looking into alternative options for outsourcing? Or maybe you’re just unsure about what the best way to move forward with your current provider is. Either way, The Cattalyst can help with a free consultation.

We have decades of outsourcing experience and strong relationships with some of the top firms across the globe. No matter what your outsourcing goals are, we can help you reach them at a price point you can afford.

So why wait? Take the first step toward fixing your problems by reaching out to us today for a free consultation.