Exploiting the outsourcing partners

Out sourcing is a big business in countries like India and Sri Lanka is also playing catch up in the game. But in our desire to get into this game, we have overlooked one crucial factor. What happens when things don’t go according to the plan.

For most US or European companies, the main reason for going for out sourcing is the cost factor. But since of late, a new trend is also emerging. That is the exploitation of the out sourcing partners in Asia. These companies usually draw up their contracts stating that any legal action needs to be taken up in their countries. This immediately puts the out sourcing companies at a risk as litigation in US or Europe for a small company in Asia is a very costly affair. So it makes it sensible for these companies to absorb their loses and walk away from the situation.

The companies in Europe and US, knowing this very well, come to these companies and play a very dirty game of getting their work done cheap and at times for no cost. the out sourcing companies hoping to build lasting relationships go out of their way to delight these customers, which most of the time end up doing more than they quoted for in the first place. Then at the end, after all the hard work they put in, if the company in the west refuses to pay, citing some odd reason, the outsourcing companies are at a loss.

The downside of all of this is, although the governments and governmental agencies promote the out sourcing business as a major foreign exchange earner for the country, they provide absolutely no support in such situations, in terms of arbitration or escrow services. I think it makes sense for the government or the ICT Agency of Sri Lanka to step in and set up and escrow service with an arbitration panel to help the ICT companies in Sri Lanka who are engaged in outsourced projects to foreign clients.

But as the saying goes, once burned twice shy, these serve as lessons in dealing with foreign clients, so you can avoid getting into similar situations in future projects. Managing the clients is an art. And managing clients with a hidden agenda is both an art and a task that needs you to be two steps ahead of the client. I was

While we battle out our case with the clients who tried to fleece us, I hope the rest of the companies who are engaged in such projects, take the necessary precautions to avoid such pitfalls. And we are not going to easily let go of people who walk out on us with our intellectual capitol! Though they were very unethical on thier conduct, we are still trying to act ethically. But there is a limit to everything!


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