Outsourcing is nothing new, but recent outsourcing is different, both in the nature of the activities we're outsourcing, and where the sources are. No longer do we outsource only manufacturing; no longer are the source countries all industrial powerhouses. Today we're outsourcing thought work, too, and the source countries — India, the countries of the former Soviet Union, and Eastern Europe, for the most part — have large numbers of people who can think.

Apples and Oranges, by Paul Cézanne (1839-1906). Oil on Canvas, ca. 1899. The painting is at the Musée d'Orsay.
The idiom, "apples and oranges," is an expression used to remark that some things are so different that they cannot be compared one to the other. Comparing domestic and offshore labor costs is like comparing apples and oranges.
Photo courtesy Wikipedia.
Outsourcing now threatens the jobs of engineers, scientists, doctors, technicians, and decision makers — people who are much closer in demographic type to the people who make the outsourcing decision. As decision makers, we're now outsourcing the jobs of one another's friends and relatives.
Since what we're doing might have a direct and negative impact on our lives, it pays to examine it more closely than most of us have done so far. Here are just a few issues that any outsourcing plan should address.
- Bright flight
- People whose jobs haven't been outsourced might believe that they haven't been outsourced yet. Since the brightest of these always have alternatives, they might depart preemptively, and you could end up losing people whose jobs you had no intention of eliminating. Retention costs money, and losing good people costs even more. How much?
- Uncontrolled transfer of insights
- If your supplier develops an innovation or acquires an insight, will you ever become aware of it? Can that innovation or insight propagate to your competitors? If it did, in violation of your contract, how would you know?
- Routine miscommunications
- Outsourcing now threatens
the jobs of those
in the same demographic
as the decision makers - Cultural and language differences, and less effective person-to-person relationships, can lead to increased incidence of miscommunications. Although both parties to a communication might feel that they understand, they often have strikingly different understandings. Colossal errors are possible. How often will they happen? How much will they cost?
- Delays
- Healthy in-house teams can deliver results more quickly than outside vendors can. For instance, when the vendor resides in a time zone 10 to 12 hours away, a typical round trip communication by voicemail or email can take a day or more. What's the cost of these and the dozens of other similar delay phenomena? What's the cost of a six-month extension of time-to-market?
- Forced "progress"
- Suppliers provide lower prices not only through lower wages, but also by spreading costs across multiple clients. As they gather more clients, the heterogeneity of their client base increases. Unless the supplier can encourage technology homogeneity among its clients, sharing costs becomes more difficult. Could you be compelled to upgrade systems against your will? What would be the cost of forced progress?
Failing to include all costs in your financial projections can lead to performance below what you've promised. And then your employer might encourage you to consider outsourcing not only your friends and relatives, but yourself. Top
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Much is available in the business press about outsourcing and offshoring. A recent accessible example is by Scott Thurm: "Lesson in India: Not Every Job Translates Overseas," The Wall Street Journal, March 3, 2004, p A1.
For an overview of some novel retention tactics, see "Retention," Point Lookout for February 7, 2007.
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Related articles
More articles on Organizational Change:
Comfortable Ignorance
- When we suddenly realize that what we've believed is wrong, or that what we've been doing won't work,
our fear and discomfort can cause us to persevere in our illusions. If we can get better at accepting
reality and dealing with it, we can make faster progress toward real achievement.
When Fear Takes Hold
- Leading an organization through a rough patch, we sometimes devise solutions that are elegant, but counterintuitive
or difficult to explain. Even when they would almost certainly work, a simpler fix might be more effective.
Reactance and Micromanagement
- When we feel that our freedom at work is threatened, we sometimes experience urges to do what is forbidden,
or to not do what is required. This phenomenon — called reactance — might explain
some of the dynamics of micromanagement.
Deciding to Change: Choosing
- When organizations decide to change what they do, the change sometimes requires that they change how
they make decisions, too. That part of the change is sometimes overlooked, in part, because it affects
most the people who make decisions. What can we do about this?
How to Find Lessons to Learn
- When we conduct Lessons Learned sessions, how can we ensure that we find all the important lessons to
be learned? Here's one method.
See also Organizational Change and Virtual and Global Teams for more related articles.
Forthcoming issues of Point Lookout
Coming June 14: Pseudo-Collaborations
- Most workplace collaborations produce results of value. But some collaborations — pseudo-collaborations — are inherently incapable of producing value, due to performance management systems, or lack of authority, or lack of access to information. Available here and by RSS on June 14.
And on June 21: Asking Burning Questions
- When we suddenly realize that an important question needs answering, directly asking that question in a meeting might not be an effective way to focus the attention of the group. There are risks. Fortunately, there are also ways to manage those risks. Available here and by RSS on June 21.
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