28.4.08

Best Practice - Be honest with your staff

I just read an interesting question on the outsourcing forum on Linked In. It asked a simple question about whether it was time to lose "outsourcing" in descriptions of global technology sourcing partnerships. The general consensus was that no matter what you call it, your remaining staff will figure out that it's outsourcing. So the semantics matter less than execution.

I agree.

There is no need to try to disguise outsourcing because there is no need for the practice to be stigmatized. This is a hard sell, but here are a few points to ponder:
  • If your company buys software you are outsourcing the R&D and manufacturing of that software tool.
  • If your company uses UPS or FedEx to ship stuff you are outsourcing the delivery of packages.
  • If your company hires a firm to come in and water the plants in your office once a week you are outsourcing the care of your corporate flora.
You could get even more creative in this proof and eventually realize that all the for-fee services people take for granted are, in point of fact, a form of outsourcing. I haven't tested this argument with anyone so I don't yet know if it will sway staunch critics of outsourcing. But it is nevertheless true. All trade is a form of outsourcing. All companies outsource.

This leads me to the conclusion that it is not outsourcing that people fear or hate. It's the unknown aspects of what's behind the outsourcing (and how that will personally impact their jobs and livelihood) that people fear and loathe.

To get at what people think about various outsourcing decisions, take each of the three examples I listed above:

  • Software tools: Most people won't believe you when you tell them that this is outsourcing. But if you were completely vertically integrated, you'd make your own operating system. So why shouldn't you? Unless you are Google, all your staff will quickly answer:
    • because we don't know how to make an operating system.
    • Microsoft can do it much cheaper, and probably better.
  • Shipping: Why wouldn't you have your own truck fleet, and take your own packages around the globe? Wal-Mart has done that. Again, unless you're a massive company, this will be a no-brainer. Most everyone in your company would answer that you outsource your shipping, because:
    • it's a messy problem, requiring trucks, and planes, and delivery agents, and a lot of logistic expertise you don't have and don't want.
    • DHL, or FedEx, or UPS, or who ever you use can do it much cheaper, and more reliably.
  • Watering plants: Unless you're a very small company, you won't get much argument from your staff on this one. Your staff will understand that:
    • watering plants isn't core to your business.
    • anyone in your office who might be inclined to do this probably has a day job that is more valuable, so a service is more cost effective.
In each of these cases, the reason you outsource is obvious, and your staff is OK with your decision to pay some outside entity to do these jobs for you.

It's a tougher problem in technology outsourcing, where traditionally there has been more vertical integration (more in-sourcing). In this case, I have some simple, actionable advice to help your staff get their heads around your technology outsourcing programs, so that hopefully one day they will be able to say "of course we outsource our Exchange system administration... that's just a service we buy, like electricity or dial-tone."

Actionable Recommendations:
  • Call your outsourcing programs something simple and direct. I like "outsourcing." Don't get hung up on semantics, and don't go crazy trying to spin your programs.
  • Be clear and direct about your business drivers. Define (and document) why you are outsourcing aspects of your technology development or delivery.
  • Explain these business drivers to both your staff and your partners.
  • Establish a well articulated governance model that makes performance of the outsourcing partnership measurable and transparent.
  • Lastly, make it clear to your remaining staff that the partnership is now part of the new definition of "team," and go to work on the other management best practices I've defined herein.
There's more information on this topic (including the original question and comments from several people, including myself) on the blog "Horses for Sources".

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