Warning on perils of outsourcing

Companies should be wary of outsourcing processes that distinguish them from the rest of the industry, says Kensington Mortgages.

Ian Giles, director of marketing at Kensington, warns companies to be wary of outsourcing any processes that set them apart from their competitors.

He says: “Differentiation is important. If you have a process that differentiates you from your competitors you should think twice before outsourcing it.

“If it is one of your firm’s key selling points – and processes often are – your ability to adapt it at the drop of a hat is likely to outstrip that of your outsourcing provider.

“With outsourcing, firms are vulnerable to having their ideas and strategies shared with other firms.”

He adds: “If you’re doing what everybody else is doing but more expensively, then for goodness sake outsource. But from a sales and marketing perspective I’d be pretty worried about seeing any process that plays a strategic role in a company outsourced.”

Alan Cleary, managing director of edeus, says: “When you are building a system like we are you don’t want to transfer your ideas to a software company which can sell the system on to someone else.

“What we’re doing to combat this is not using a single company to build our software system but several, so it can’t be sold on.”

Homeloans Management, which handles outsourcing for Kensington, declined to comment.