Strategic Misrepresentation about Outsourcing

Strategic Misrepresentation about Outsourcing
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Strategic Misrepresentation about Outsourcing
Strategic misrepresentation refers to the planned, systematic representation of an untrue statement of a material fact that is otherwise misleading. When doing business, many associates tend to employ this tactic to maximize profit. If unnoticed, the party that misrepresented facts would benefit while the other party would count losses. Any form of strategic misrepresentation is a breach of business ethics and can lead to a lawsuit if discovered. That is why businesses are required to act ethically by being honest in their reports. Business ethics dictate that a member or client must not intentionally misrepresent facts. This is a poor strategy that might have unfavorable consequences. This practice is common in nearly every industry, including outsourcing. Outsourcing processes outside direct organizational control inexorably increase fraud risks, and strategic misrepresentation is one of these risks. The primary reason outsourcing increases fraud risks is that the organization’s internal controls get outreached to an entity or third party that lacks an equal penetration level.
An example of strategic misrepresentation in outsourcing is falsifying reports. This includes false data about work performance, such as inflating the amount of work being done. This occurs when an outsourced company fakes the number of hours spent on a project and strategically lies about the tasks completed. For instance, a team is hired to complete two projects. The members spend five hours working on one and three hours working on th...