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Outsourcing

Writer's picture: Dave GobleDave Goble

The contract will nearly always, if not always, favour the outsourcer because the outsourcer is practiced in the art. Imagine you’re in IT and have just been outsourced. A member of a technical Systems Programming team, you are liaising with the Applications Support team who have not been outsourced, about identified performance improvement opportunities, implementation of which will give end users an improved experience through faster response times. Your new boss gets wind of this, and calls you into his office. He tells you the contract describes how the income of the outsourcing company depends in part on the client’s CPU consumption, and it’s not in our interest to reduce it, regardless of perceived benefit/s. Indeed, the reverse is true.

It's all about reducing costs, of course, where an outsourcer typically operates on a scale that results in lower cost contracts with hardware and software suppliers than any single client is likely to secure alone. Furthermore, as technology and communications has advanced, it has become increasingly possible and cost-effective to service IT across thousands of miles, and so overcome geographical obstacles and utilise low cost resources (people) sometimes distant from the actual business. The outsourcer can present a competitive cost case to potential clients based on these benefits. 

Oh but what price loyalty to your staff? And what about your customers who might prefer doing business with a brand that employs “locally”? They might even vote with their feet. On the subject of brand, what about the risk to that? The raised potential for some sort of serious and highly visible failure borne possibly from inferior equipment and / or lower skilled resources, or perhaps just the process or immediate aftermath of outsourcing itself. It’s not pie in the sky. It has happened, and will happen again. But none of this seems to matter. They’ll just tell you they have to reduce costs to stay alive and relevant in the market place, and this is the way to do it. They’ll also not be around within 12-24 months, so avoiding any blemish to their CVs if / when service is impacted, and the deal proves less of a cost saving than originally planned.

Every single engagement by the client of outsourced staff triggers a well-oiled process (or processes) leading to cost and delay for the client. The larger the request the longer and more complex and more costly the process. Indeed, one tactic the client may adopt to achieve a large request at minimal cost is to break it up into much smaller bite-sized requests that conceal the real scale of the project / work, indeed, the fact it is a large project at all. Eventually, to make a mark, a future manager or management team will champion the merits of in-sourcing, and the merry-go-round will turn again.

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