5 Signs of a Bad Outsourcing Company

Posted by on February 25, 2013 in Business Management [ 0 Comments ]

outsourcingWhen it comes to streamlining operations, reducing overhead, and increasing overall efficiency and productivity, outsourcing offers companies those benefits and more.

However, being that not all outsourcing companies are created equal, the challenge lies in knowing how to differentiate between a good outsourcing company and a company that could end up costing your company a substantial amount of money—with little or nothing to show for it.

Related: See what our HR outsourcing vendors can do for your business

Because outsourcing constitutes new and unfamiliar territory for many companies, it’s critical to thoroughly research prospective companies before contracting with them. To help simplify the process, here’s a look at 5 telltale signs of a bad outsourcing company.

1. Cost Concerns

In order to make outsourcing work for your company, you have to find a company that can provide your clients with the same quality of service you’ve been providing—but at a reduced cost.

Related: Why Your Business Needs a BPO Partner

Make sure all costs are clearly spelled out in the contract. If the so-called “fixed-price” contract contains caveats such as limitations or maximum levels, you could find yourself paying substantial penalties—thereby negating the financial benefit of outsourcing.

In addition, due diligence in discovering an outsourcing company’s track record with past and current clients in delivering quality service on time and at agreed upon costs, is critical.

2. Lackluster Growth

You wouldn’t invest in a company that shows a lack of solid sustained growth. And you shouldn’t trust the outsourcing of critical services to a growth-stunted company either. Growth is a strong indicator that a company is doing things right—that it’s attracting and keeping clients by being progressive and innovative in delivering quality service.

3. Lack of References

In today’s competitive business world, companies understand the value of providing prospective clients with ample references from satisfied customers both past and present. Being that a quality outsourcing company will gladly supply you with plenty of references, it stands to reason that a company that lacks references will also lack the ability to provide you with the level of quality and service that you are looking for.

Related: 10 Tips for Building Long-Term Client Relationships

4. Quality Concerns

Good companies pride themselves in their accomplishments. Typically, they receive awards and recognitions for their achievements that they are all too happy to share with potential clients. In addition, press releases, favorable articles, and positive reviews on Social Media sites also lend credibility. Outsourcing companies that lack written reviews and ratings of their services should be quickly dismissed.

5. Evasive Communication

When selecting suitable companies to contract with in outsourcing your services, clear and honest communication with corporate management is critical. Leaders who are aboveboard and have nothing to hide should welcome any questions or concerns you may have regarding the qualifications of their companies. And they should be expected to provide clear and complete answers.

Before contracting with any company it’s best to try them out by assigning a series of tasks to be performed by a certain deadline before entering into a long-term relationship. Just be aware that companies that perform well in an attempt to earn your business may not operate at the same level of competency once they have your business. Should this prove to be the case, there are a number of sites such as PeopleClaim.com for businesses to file complaints.


Bio: Robert Cordray is a former business consultant/entrepreneur with over 20 years of experience. He is currently residing in the southern California area, and currently helps consumers and business owners with alternative dispute resolution. If he’s not reading or writing, he’s most likely with his beautiful wife and three children.

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