Outsourcing projects can save time and money, but sometimes it can also be a costly mistake. Some projects are best handled in-house—both in terms of savings and successful results. To show you how outsourcing can cost more than it’s worth, here are two real-life examples of when outsourcing a project didn’t pay off.
Saving both money and end users’ time
A company I once worked for used outside contractors for most of their equipment upgrades. When they decided that all the 486 workstations needed an upgrade from 8-Mb RAM to 16 Mb, an outside company was asked to quote a price. The quote was an exorbitant sum and would have required removing each PC from the office, performing the upgrade, and then returning the machine. This would have meant lots of downtime for our end users.
Knowing the job could be done more economically and efficiently in-house, we decided to tackle the upgrade ourselves. First we went through our graveyard of broken machines and found enough chips to upgrade 15 percent of the systems, which we did immediately. Then we ordered new chips for the remaining systems, allowing a few for spares. With the new chips in hand, we were able to upgrade the remaining systems one at a time, keeping the end users’ downtime to a minimum.
When we arrived at an office, we would open each system individually, pop in the chip, and have the system working again in a few minutes. We were able to show the bean counters that we could do the job for 23 percent of the cost quoted by the contractor and with little or no disruption to our users.
At the same time, we were completing our hardware audit, for which we were also allowed a budget. This allowed my IT department to show a savings on both the upgrade and the audit.
Watch out for contractors who cut corners
Even when contractors offer competitive bids, it’s important to make sure that they don’t cut corners in an effort to stay under budget. For example, a building my company had recently acquired needed a network, and my IT department was very capable of doing the necessary cable runs. We prepared a quote and submitted it to the accounting department. To our utter amazement, an outside company’s quote was less than ours. Since our company’s policy was to always use the lowest bidder, the outside company got the job.
Suspicious of such a low bid, we watched the contractors like hawks. In the end, the job was done to our satisfaction but only because we didn’t turn a blind eye to their short cuts. I saw several attempts to reuse an old cable that needed to be replaced. The contractors were prepared to seriously cut corners so the job would come in under budget. Had we not been there, watching every move, our new network would have been shaky, to say the least.
Share your outsourcing horror stories
If your organization has had a bad contractor or outsourcing experience, we want to know about it. What happened? Was the problem serious? How did you resolve the problem? Post a comment or write to Jeff Dray and share your outsourcing horror stories.