Are you aware of the fact that offshore IT development outsourcing puts your software rights and confidentiality at considerable risk?

Why is this, you ask? Offshore developers are not bound by the laws of your business location. If your rights are not adequately protected these offshore developers may come back one day and demand royalties for their programs, even if you have paid in full for the software development. Usually in the US it is customary that such contracted work belongs to the end-client.

Under offshore outsourcing has no longer legal validity. Remember offhore developers are not bound by US laws and they may also sell the development at ay time to other organizations without your consent.

It is imperative to protect your intellectual property.

Similiar is valid to off-shore outsourcing of IT Infrastructure. It means somebody on the other side of the world has access to your systems and your data.

The loyalty of any employee within the outsourced provider is naturally not with your organization but to their own, if there is any loyalty at all. If outsourcing to countries like India there may be even some employees that hate you for your beliefs or the country you live or work in.

Due to geographical distance, difference and time and cultural differences there are many things you may not be aware of and don’t know. And what you don’t know can hurt you. I have heard stories of service providers taking whole systems hostage because a client did not want to renew or renegotiate a outsourced contract. You may be completely at the outsourcers mercy, if you are not able to retain some inhouse control.

And here again, remember: US Laws are of no help at this time.

You may say that there maybe laws in the country you have outsourced to that will protect you.

Do you know how enforceable these laws are?
Which actions do you have to take to have these laws enforced?
What is the cost involved?
Judicial systems in other countries and cultures work in different ways than in the US or in your country of business.
All this does not mean that you should not outsource and many companies have done so successfully. It simple means beware of the dangers and risks you are facing. Make sure that you have the necessary means to protect yourself and your business.

Outsourcing, whether onshore, near-shore or offshore done right can provide a huge operational and financial benefit to your organization. Before considering outsourcing, talk to an experienced consultant and also to a lawyer who has the expertise in regards to the laws and regulations in the outsourcing country of your choice.

Always remember to protect your 3 intellectual property rights:

Physical
Electronic
Legal
Don’t make the same mistakes other companies have made during their attempts to outsource and have failed.


Oliver Schmid has extensive experience in offshore outsourcing to the Philippines, onshore outsourcing to Canada and domestic Outsourcing of matrix oriented call centers. He is also versified in outsourcing of data center operations and data center monitoring and support. In addition Oliver Schmid participated in various 3PL and Supply Chain outsourcing initiatives.

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Comments
  1. […] Outsourcing for Success noted, “Due to geographical distance, difference in time zones, and cultural differences, there are many things you may not be aware of and don’t know. And what you don’t know can hurt you. I have heard stories of service providers taking whole systems hostage because a client did not want to renew or renegotiate a outsourced contract.” […]

  2. Thanks Oliver Schmid. This was very informative.

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