How to overcome the initial fear of outsourcing

Contrary to what you may believe, not everyone has yet found a way to outsource the IT function. In some cases the department may not be large enough to warrant outsourcing as an option. In some cases, it’s just that there has never been enough reason to change the way things are done. But it still feels unusual when a fairly large company calls up and asks for advice on a first generation outsourcing programme. That’s what happened to me recently and I went it to explore some of their options. The primary reason for them to not use outsourcing was really a sense of loyalty to their team. They wanted to maintain a reputation for being the kind of company that people want to work for and it was always felt that outsourcing was a negative approach – the kind of thing ‘other’ companies would do. However, cost pressures during the downturn had been biting and they overcame the reluctance to explore outsourcing as a possible option. I did some work with them on how to still remain a responsible employer even with IT outsourcing being used as a new company strategy. As a part of my research for that, I spoke to some people I know in the industry, particularly to ask them for their own experience in terms of how company culture might derail an outsourcing programme. Patrick O’Brien, a senior analyst at Ovum, told me: "The dilemma is between making hard-nosed business decisions which make clear economic sense, faced with the hard reality of the effects these decisions have on current employees. It is especially difficult in smaller companies where there is likely to be a stronger relationship between the decision-makers and the affected IT workers. That said, I have never come across a potential outsourcing client who did not follow through with an outsourcing project because they didn’t have heart to lay off workers. Difference in business culture between it and the vendor, or concerns about risk, yes - concern for current employees, no. In truth, companies who get as far as calling in consultants and RFPs are likely to have already accepted the idea of job cuts, or, more likely, be actively seeking them." Pat’s comment says it all really. In the current tenuous recovery period, it’s going to be a very risky strategy to put individual employees before the health of the entire company. Mike Corbett, the founder of the International Association of Outsourcing Professionals, explained to me: "If there's no burning platform for change then it's not likely to happen. In those companies, pilot programmes, small deals that can grow over time, gradual winning over reluctant executives, or, target outsourcing efforts in the parts of the business where the cultural disconnect in the least and need for change the greatest - not just in the areas where 'everyone else' is outsourcing." And that’s good advice. Focus on the low-hanging fruit where the need for change is also greatest, but accept that unless there is really a sinking ship, someone will prevent it happening. Andrew Rigby, a partner focused on outsourcing at Brodies, mentioned another factor: "The "soft" issues in outsourcing are not really about TUPE or industrial relations in the hardest sense, but are very much about finding a route through which both the business and, so far as possible taking into account commercial needs, employees can ‘buy into’ the outsourcing. This means change management and effective communication plans, staff involvement and pursuing an approach, which aims to ensure that all or most of the impacted employees are transferred across to the new supplier." All three of these comments resonate particularly with the kind of organization that has naturally shied away from outsourcing. You really need a burning deck to force the change past the protection of the old culture, you need to plan the change and to get people on board with it as a survival route and once a board has started asking suppliers for quotes, it’s unlikely they will go back. *View all IT Outsourcing blogs by Mark Kobayashi-Hillary

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