Outsourcing causes more problems than cures for a company

Disagree

1 of 17

by Malcolm Toogood

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Outsourcing is not a problem; in this context, it is simply the misuse of a term.

Unless they are totally self-sufficient, everybody outsources. It doesn't matter whether we are at home or in business, we all do it most days of the year. Want some examples?

If you keep chickens in your back yard, feed and water them, house them and care for them, then daily collect sufficient eggs from them for your needs, you are self-sufficient in eggs. If however, like the vast majority of consumers, you go to your local supermarket and buy a dozen eggs in a package when you need them, you have obtained your eggs via an outsource process. You have devolved the need for keeping chickens yourself to a specialist company that keeps millions of chickens, feeds and waters them, houses them and cares for them, then collects all of the eggs from those chickens, packages them in convenient quantities and ships them to your local store ready for you to purchase on demand.

Ah, semantics I hear you say! In fact, I bet you have opened your e-mail application already, and started typing a response on your PC's keyboard. Nice PC is it? Build it yourself did you? No? Well then, you outsourced it didn't you?

Is that e-mail ready? Just pressing the send button now, eh? How is the e-mail getting to me? OK, via your Internet Service Provider. And what exactly are they? A Company that provides the means for all of your e-mails to be sent to, and received from, other people. An outsourcer then, unless of course you have your own servers, and have made supply agreements with a telecoms provider to enable you to transmit data through their network equipment, and so on. I think you get the picture.

Outsourcing is nothing more than commerce itself. It is as essential to a Western economy as air for the workers to breathe. So the debate is not about whether we should outsource, but where we should outsource from, and when. Those questions beg a different set of answers, some of which are sensible and moral, others that open a whole new can-of-worms in areas of discrimination and envy.

Should your Company outsource a function that will cost you less if you take on an external supplier who can give you either the same standard of service for less cost, or a better standard of service for the same cost?

Absolutely not, you should take on an external supplier only if they can give you both. If you can get a better standard of service for less cost, then you score two plusses: you are more efficient and you make more profit.

Should that outsourced function result in your needing to let staff go?

If the staff you are letting go were running the function so inefficiently that they caused you to look at the benefits of outsourcing it in the first place, then of course they should go. If not, then as they are good staff that you can make better use of elsewhere in the organisation, you will probably already have decided where you want to redeploy them to.

Staff displaced by an outsourcing process are bound to be upset by it, nobody likes change. Indeed, perfectly good staff may be displaced along with the others. But generally speaking, it is those who know that they hold some of the responsibility for their changed situation that make the most noise, the other ones will accept that change happens, and get on with it.

Should you outsource offshore?

If the chosen external supplier is able to fill all of the criteria above, then the answer is still yes. Provided the function can be managed and run off-site, in this hyper-connected world of ours the physical location of staff should make no difference. From a systems point of view, off-site is operationally the same whether it is in the building next door or on the other side of the planet.

However, if the function you are outsourcing is customer-facing, such as a call-centre, then you have a number of further questions to ask, not least of which is how your customers will react to dealing with that scenario. Some companies dismiss such potential customer bias as racism in disguise, and justify this by persuading themselves that a customer who would react negatively to dealing with a foreign national, is reacting no differently from one who is not comfortable with dealing with existing staff who are from an ethnic-minority background.

This conveniently misses the important point that, whilst it matters not a jot what colour or creed someone is, it does matter how they perceive any question they are being asked, and how they assess it due to either their local socio-environmental background, or their command of the native language of the customer, or both.

There are plenty of misunderstandings between English native-speaking staff hailing from two different English-speaking countries, where a totally innocent colloquial phrase from one can have entirely different connotations in the other. The odds of creating such misunderstandings rise several-fold when staff in the same scenario are not native English-speakers.

Although overseas workers whose second language is English are encouraged to think in English whilst working in, or with, an English-speaking Country, however competent they are they may easily, when presented with an unfamiliar scenario, momentarily resort to interpreting a question or phrase through their own language, in order to fully-understand it. This is a double-whammy, because not only could the direct translation skew the sense of the question, their previous life experiences via their local socio-environmental background may skew their initial assessment even further. This puts a whole new layer on the communication scenario, especially when a customer has been inconvenienced, and is, therefore, already frustrated with their situation. Adding a Company representative who does not fully understand what they are saying, or, as a consequence, is slow in interpreting their requirements, is just pouring more fuel on their fire.

Companies should think long and hard before outsourcing customer-facing functions overseas, particularly to non-native-speaking countries. But if they have genuinely weighed up the pros and cons, and are satisfied that this will still benefit their company's overall performance, then they should go ahead whilst actively managing any consequences.

It is probably that latter aspect that is missing from most scenarios where outsourcing goes pear-shaped. This is as annoying to ex-staff who have been displaced by the outsourcing as it is to customers, but in such circumstances, ultimately it is the Company that will suffer. And this is where a little common-sense needs to come into the assessment of the results by both customers and staff.

If the results are positive, the customers are happy with the situation, and the staff remaining are part of a thriving Company, then ultimately everybody has won. If not, and customers are deserting in their droves because of the change to the way the Company operates, then are they really the Company you want to purchase from, or work for? If the company's management are that hopeless with such fundamental decisions, then are they going to be any better in the decision-making process allied to their product design, or service offering? Would you want to work for a Company that was, evidently, hell-bent on self-destruction? The answer, for both customers and staff, in each instance is: probably not. In which case you are better off taking your custom, or labour, elsewhere.

At the end of the day, outsourcing is only one factor in the whole scheme of things. Good companies make good products, supply good services, and look after their staff and customers equally well, by managing their businesses in the most efficient manner, including outsourcing, to make a profit for their shareholders.

Regardless of any outsourcing policies, bad companies don't do any of those things.

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