What are the risks involved from outsourced provider?

Answer 1

While each outsourcing deal presents unique issues, the risks generally fall into four main areas:

Operational Risks: These include the financial and legal risks that arise when transitioning into an outsourcing relationship and allowing a service provider to transform services to reduce their cost. They also include the legal ramifications of exiting a contract when services are no longer needed.

Commercial Risks: Companies usually enter into outsourcing contracts to save money. This can create problems because when companies lock themselves into a service contract, they generally lock in a price. As time goes on, market levels change and the customer company could end up paying too much for the services they receive.

Business/Strategic Risks: Businesses are constantly identifying new strategic initiatives. If a third-party IT provider can't accommodate new goals, the customer company might want out of the contract.

Legal Risks: These include privacy issues, regulatory factors, outsourcing laws and legal liability. "There is a tremendous amount of industry-specific regulation around outsourcing," Peterson said.
(This article can be found at the 1st link)

Five major risks of outsourcing have been identified in recent years:

* Communication/cultural barriers
* Misunderstanding of requirements
* Quality assurance
* Concerns about intellectual property security
* Differences in company infrastructure and processes
(Found at the 2nd link)

Answer 2

Depends what you're outsourcing. But in general terms, I would say the risk is that they don't put your interests first. They are motivated to maximize their own profits, not yours. They also may not understand your processes as well as you do.

Answer 3

Lost of jobs at your plant. Inventory loss due to bad paperwork handling of parts to and from the plant. No control over expediting of products because you have put that into someone else's hands.

Answer 4

Lack of quality. Poor vendor support. Product does not meet specifications. Jobs lost to another country. (I could go on)