Offshore outsourcing services have become the panacea for all businesses now. Being the power to transfigure and bring out a better business performance, it is well appreciated today. eMerchants have realized that software outsourcing is critical to establish business venturing on the web

However, these services have started facing some failures.

A failure can be the termination of the contract by the client, before its expiration date, for contracts that had been in place for at least one year.

From the view of providers, the average annual retention rate seems to be 90% to 95%, while the failures were between 5% and 10%.

Behind the scenes

Whatever the rate, each outsourcing failure is expensive for both the parties. Therefore, the reasons behind failures are important.

In some instances, the provider's offshore outsourcing services seemed too expensive, in some others, the provider's performance was not up to the expectations of the customer, while a few other customers felt that they could do better themselves.

The root cause is the missing link between the customer's expectations and the perceived results. This is due to the lack of understanding between the service provider and the customer.

Steps to avoid these defaults

• Consider taking offshore outsourcing services as a strategic investment.
• Understand and align the interests of service providers and customers.
• Set a standard, objective against which the management process can be measured gradually.
• Develop a system for dealing with problems and negotiating changes & maintain it as a part of the ongoing management of relationships.
• Include people who are skilled at handling relationships, and those who have personal, professional & economic motives in doing so.

Many survey results have revealed that global expenditure on outsourcing services offshore is showing an upward trend. However, this phenomenon can be changed to a very great extent if care is taken to avoid the above discussed shortcomings.