Having been involved in outsourcing decisions as both an internal executive sponsor and in support of clients for over 16 years, I can honestly say I have encountered very very few projects which have not had an extremely adverse effect on the companies concerned.
Even those companies providing outsourcing solutions to clients with significant expertise often get it wrong when making decisions to fulfill elements of service based upon reducing cost via offshore resources. In recent years, several occasions have seen me finding myself being the sole person among board members pushing back on these decisions from the perspective of painful experience. It is a hard sell requiring re education and the illustration of precedent to make a point balanced against what looks like a strong financial imperative. The case is often made in so compelling a fashion proper due diligence may be less than it should be to enable a company to get to the cost savings as quickly as possible. Lets be honest with ourselves, many companies do not welcome push back when a silver bullet solution is presented which appears to have ticks all the right boxes. It is amazing to me that the sponsors of poor outsourcing decisions have all too often still been in post even after making highly flawed decisions which have ended in what should have been quite predictable consequences if one was taking the balanced long term view as the board are meant to do. If this proves one thing, it is that your board members are probably human too and in a moment of stress, might jump at the attractive option with less than total objectivity. Corporate governance requirements are too often bent to allow a questionable decision or decision which should have been questioned with far more rigor,
Resistance to outsourcing from the public, poor process and cultural differences tend to be overlooked as does the massive cost of backtracking should things go wrong. In the short term poor outsourcing programs often means loosing some of the key assets (both hard and soft) which made a business function effectively forcing a dependance on a less the equal relationship. Very few companies admit they made the wrong decision even when glaringly often to employees, customers and clients alike.
It has also meant increasing brain drain out of many western economies as well as limiting the opportunity for those who want to access the industry concerned in some cases as offshore outsourcing has become epidemic. In terms of the IT industry, some independent companies have estimated that 27% of jobs within the UK IT industry have been lost to Indian outsourcing companies alone over the last 3 years. More disappointingly the first jobs to be outsourced are often those which enable people to enter the industry and gain experience developing their skills with experience and training in a real world environment. I firmly believe that offshore outsourcing decisions have a much broader strategic importance for the UK skilled labor force than what seems on the surface to be an easy way to reduce cost. In the worst instances I have seen customer service decline, causing reduced revenue followed by another outsourcing decision to bridge the revenue gap starting an outsourcing cycle that becomes a company wide downward spiral as vital skills are lost. Even a limited decision to outsource can be followed by high staff turnover all across the business loosing even more expertise as people rush to abandon the sinking ship and try to find a more secure option and it becomes impossible to attract the best people.
At a time where we need to be helping young people into our companies and developing skills, too often we have removed an entire tier of employment opportunity. This has been done at our peril in order to gain the attractive looking numbers advantage shown in outsourcing companies presentations. It is time for a reality check, particularly for public facing businesses. Some of the companies most highly rated for customer service in the UK are those actively capitalizing on decisions made by many others in the same industry to outsource offshore.
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