Offshoring can include innovation offshoring, IT services offshoring, or production offshoring. There are a lot of benefits companies can get from offshoring, but it is also good to note the various risks involved in employing this business strategy.

1. Offshoring Risks
Risks are an inevitable part of a business. Just take a look at offshoring. This modern business strategy has a lot of risks
involved in it - so many, that a company that always wants to stay in a status quo never laid their hands on it. However,
for those who are brave enough to tread on new territories, they have reaped a lot of benefits. Offshoring involves the
transfer of one or more business processes to another company that is geographically far from the client company.
Offshoring can include innovation offshoring, IT services offshoring, or production offshoring. There are a lot of benefits
companies can get from offshoring, but it is also good to note the various risks involved in employing this business
strategy.
Here are five offshoring risks that companies must be aware of:
1. Differences in culture
Business relationships are affected by the underlying elements of natural cultural influence. These can be subtle
or overt, but can be potential pitfalls if not addressed carefully. English may be the universal language of BPO
service providers, but it does not stop there. Every culture has varied assumptions, attitudes, expectations, and
thought patterns. It would be good to recognize these so you can work without hurting your business
relationship.
2. Protection of intellectual property
Intellectual property, if stolen, "is a genie that can’t be put back in the bottle". This is according to Nennette Day,
a special agent from the FBI’s Boston Cybercrime Unit. Offshoring widely opens its doors to industrial espionage
since there are no concrete laws that protect intellectual properties. Companies must be vigilant in sharing
information that is crucial in their business operations. That’s why it is best to share limited data for projects to
prevent intellectual property theft.
3. Poorly defined requirements
Communication difficulties are by far the most consistent reason project requirements are not met.
Misunderstanding project requirements will only lead to failure.
4. Inability to deliver the requirements on time
There are a lot of factors that contribute to the inability to deliver the project requirements within the specified
date. It could be because of inferior ability on the part of the offshore team, or unclear project requirements set
by the client company.
5. Communication barriers
This is very common in offshoring since the client company and service provider are located in different
geographical locations. Even if both parties are fluent in English, lack of face-to-face communication can still
pose communication issues.
MicroSourcing is an offshore outsourcing solutions provider based in Manila, Philippines. The company offers a wide
range of delivery models: project outsourcing, offshore staff leasing, and virtual captives.