What You Don't Know Can Hurt You

More and more attention is focused on the potential risks of outsourcing and offshoring due to high profile cases such as the massive accounting fraud at Satyam Computer Services in India.  Companies looking to accelerate expense reduction in the face of dwindling revenue are increasing their exposure to a variety of risks through business process outsourcing ("BPO").  Here is a related observation from a recent article in CFO magazine.

Experts predict that recent events will spur more-comprehensive scenario planning regarding potential offshoring vulnerabilities, including performance problems, power outages, terrorism, and fraud. "It's causing a lot of people to pause for a second and say, 'Oh my God, there are more unknowns and risk than I thought,'" says Robert E. Kennedy, executive director at the University of Michigan's William Davidson Institute, and author of a book about offshoring called The Services Shift.

How well do you know your BPO partner and the potential risks associated with your relationship?  Wheelhouse Advisors can help build a risk assessment framework to provide the necessary insight to manage a successful relationship.  Visit www.WheelhouseAdvisors.com to learn more.

Reducing Expenses May Not Reduce Risk

More and more companies are looking for ways to reduce expenses and a popular method recently has been outsourcing.  While many benefits come with an outsourced relationship, so does increased risk.  Proper due diligence and carefully crafted service level agreements are essential.  However, with the recent fraud at Satyam in India, those activities may not be enough.  A recent article in CFO magazine highlights the problem. Here is a excerpt from that article.

The enormously inflated cash balances at Satyam have popped a hole in the reputation of the outsourcing market, which has grown from business offering solely tech business, to back-office work such as finance and accounting. "This has really shaken up the outsourcing industry," says Peter Allen, a partner and managing director for outsourcing advisory firm TPI. "The industry is built on relationships that imply some level of trust and confidence and integrity."

How comfortable are you with your outsourcing partner?  Have you assessed the risks with the relationship lately?  If not, Wheelhouse Advisors can help.  Visit www. WheelhouseAdvisors.com to learn more.