ISSN: 1391 - 0531
Sunday October 28, 2007
Vol. 42 - No 22
Financial Times  

Filtering inflows: Managing risks at outsourcing

By Damith Kurunduhewa

“Civilizations – like empires – fall, not because of the strength of the forces outside, yet through the weakness and decay within” - splendid words of wisdom by the great Indian leader Sri Nehru.

This simple philosophy applies to corporate organizations as well – no matter what the magnitude of the business is. There are a number of real life examples for us to realize how some corporate giants have collapsed on their way to the top – principally because of the weaknesses and decay within – which they never felt in advance while competing in the playing field.“Outsourcing” – or hiring services from external service providers to operate a business function is a popular method of resource management world over.

The outsourcing, if mismanaged – creates a weakness than strength and also results in the organizational decay in slow motion. Many corporates are hiring services on the parameter known as – ancillary business functions. These services cover a wider spectrum such as Receptionists, Secretaries, Cashiers, Security Officers, Sanitary Agents, Transporters, Caterers and Parking Attendants etc.

We invest an enormous quantity of time, energy and effort to ensure that our OWN business associates are professionally vetted and enlisted – yet we perhaps are unaware of the credentials of outsourced staff that penetrate into the heart of the business – conveniently by invitation. The principal risk in outsourcing is that if a particular group with vested interests plans to disrupt your business, there is no better (tested) way than infiltrating via an outsourcing agency.

The agency could even be set up, purely to meet this discret objective – yet without arousing suspicion of the client business company.

The other core risks in outsourcing range from corporate raiding, data theft, image destruction, sabotage and terrorism as well. ‘Outsource Specific Risk Analysis’ can provide a comprehensive picture of gravity in terms of business protection.

The outsourcing agency can be an innocent business front of any local or overseas entity that is adverse to your business – but you will never identify the underground connectivity between the two - unless the business managers are consciously alert about such negative potentialities.

The first step in managing risks involved in outsourcing is to execute a back track study of the outsourcing source. In summary, who really is behind the investment of the outsourcing agency? And also not to get deceived by the goodwill of the business or the number of years that the agency has been in business.

The simple reason is that the investors or the ownership NOW could be different to the original setting – yet under the same trusted branding.

Enlisting credibility

The client business organization must exercise its right to verify what enlisting controls the outsourcing agency adopts in their enlistment disciplines. In some cases, it is just a female school leaver who manages the enlistment process at the outsourcing agency, where a seasoned terrorist or criminal can penetrate their verifications and eventually end up in your business ambience.

The performance risk in relation to the skill inefficiencies can cause severe loss to the business function of the client business unless the skills levels are clearly defined and verified on the actual staff deployment. Unless this avenue is kept under constant vigil, the chances are that even unskilled staff is hired - in a nicely tailored work dress - which only provides a momentary sense of satisfaction when you look at the quality wrapping that conceals the mediocre content.

It is vital that the outsource service provider nominates a defined team with provision for relief and other changes thus ensuring only that team serves with the client organization.

When you study just a particular (critical) business functional point, and if it has been serviced by about 100 different outsourced staff in one year, we needn’t waste our time to analyze the colossal business risk involved in there. While trying your best to minimize this risk, it is imperative to compile a personal data dossier of each and every outsourced staff member who had deep access to your business from day one.

The business manager responsible for outsourcing should be thorough in designing the service level agreement, primarily on the application need than legal concepts.

Mostly it is not the concepts that are in violation, but the functional application. Introduction of ‘Efficiency Indicator Format’ that is completed by the service point receiver is yet another way to feel the reality pulses of the actual performance. It is required to be innovative in managing risks in outsourcing. And as the saying goes “Innovation is all about winning tomorrow!”

The author is Strategic Security Specialist / Pragmatic Trainer & CEO of Strategic Security Solutions. He can be reached at –


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