Point Lookout: a free weekly publication of Chaco Canyon Consulting
Volume 4, Issue 10;   March 10, 2004: Outsourcing Each Other's Kids

Outsourcing Each Other's Kids

by

Outsourcing is now so widespread that it has achieved status as a full-fledged management fad. But many outsourcing decisions lack the justification that a full financial model provides. Here are some of the factors that such a model should include.

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

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. Go to top Top  Next issue: When You're the Target of a Bully  Next Issue

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.

52 Tips for Leaders of Project-Oriented OrganizationsAre your projects always (or almost always) late and over budget? Are your project teams plagued by turnover, burnout, and high defect rates? Turn your culture around. Read 52 Tips for Leaders of Project-Oriented Organizations, filled with tips and techniques for organizational leaders. Order Now!

Your comments are welcome

Would you like to see your comments posted here? rbrenoFdjQyvfUwyJLlqtner@ChacCXYSSWrTWmUEOJeioCanyon.comSend me your comments by email, or by Web form.

About Point Lookout

Thank you for reading this article. I hope you enjoyed it and found it useful, and that you'll consider recommending it to a friend.

Point Lookout is a free weekly email newsletter. Browse the archive of past issues. Subscribe for free.

Support Point Lookout by joining the Friends of Point Lookout, as an individual or as an organization.

Do you face a complex interpersonal situation? Send it in, anonymously if you like, and I'll give you my two cents.

Related articles

More articles on Organizational Change:

No symbolWorkplace Taboos and Change
In the workplace, some things can't be discussed — they are taboo. When we're aware of taboos, we can choose when to obey them, and when to be more flexible. When we're unaware of them, they can limit our ability to change.
A polar bear, feeding, on landLetting Go of the Status Quo: the Debate
Before we can change, we must want to change, or at least accept that we must change. And somewhere in there, we must let go of some part of what is now in place — the status quo. In organizations, the decision to let go involves debate.
A sea otter and pupPower, Authority, and Influence: A Systems View
Power, Authority, and Influence are often understood as personal attributes. To fully grasp how they function in organizations, we must adopt a systems view.
Philipse Manor Hall State Historic Site in Yonkers, New YorkGood Change, Bad Change: II
When we distinguish good change from bad, we often get it wrong: we favor things that would harm us, and shun things that would help. When we do get it wrong, we're sometimes misled by social factors.
A diagram of effects illustrating two more loops in the Restructuring-Fear CycleThe Restructuring-Fear Cycle: II
When enterprises restructure, reorganize, downsize, outsource, lay off, or make other organizational adjustments, they usually focus on financial health. Here's Part II of an exploration of how the fear induced by these changes can lead to the need for further restructuring.

See also Organizational Change and Virtual and Global Teams for more related articles.

Forthcoming issues of Point Lookout

Office equipment — or is it office toys?Coming July 25: Exploiting Functional Fixedness: II
A cognitive bias called functional fixedness causes difficulty in recognizing new uses for familiar things. It also makes for difficulty in recognizing devious uses of everyday behaviors. Here's Part II of a catalog of deviousness based on functional fixedness. Available here and by RSS on July 25.
Tim Murphy, official photo for the 112th CongressAnd on August 1: Strategies of Verbal Abusers
Verbal abuse at work has special properties, because it takes place in an environment in which verbal abuse is supposedly proscribed. Yet verbal abuse does happen at work. Here are three strategies abusers rely on to avoid disciplinary action. Available here and by RSS on August 1.

Coaching services

I offer email and telephone coaching at both corporate and individual rates. Contact Rick for details at rbrenqrLFVwCWsmFDBvNXner@ChacMBfFcrTAMMOmTtmroCanyon.com or (650) 787-6475, or toll-free in the continental US at (866) 378-5470.

Get the ebook!

Past issues of Point Lookout are available in six ebooks:

Reprinting this article

Are you a writer, editor or publisher on deadline? Are you looking for an article that will get people talking and get compliments flying your way? You can have 500 words in your inbox in one hour. License any article from this Web site. More info

Public seminars

The Power Affect: How We Express Our Personal Power
Many The Power Affect: How We Express Personal Powerpeople who possess real organizational power have a characteristic demeanor. It's the way they project their presence. I call this the power affect. Some people — call them power pretenders — adopt the power affect well before they attain significant organizational power. Unfortunately for their colleagues, and for their organizations, power pretenders can attain organizational power out of proportion to their merit or abilities. Understanding the power affect is therefore important for anyone who aims to attain power, or anyone who works with power pretenders. Read more about this program.

Follow Rick

Send email or subscribe to one of my newsletters Follow me at LinkedIn Follow me at Twitter, or share a tweet Follow me at Google+ or share a post Subscribe to RSS feeds Subscribe to RSS feeds
The message of Point Lookout is unique. Help get the message out. Please donate to help keep Point Lookout available for free to everyone.
Technical Debt for Policymakers BlogMy blog, Technical Debt for Policymakers, offers resources, insights, and conversations of interest to policymakers who are concerned with managing technical debt within their organizations. Get the millstone of technical debt off the neck of your organization!
52 Tips for Leaders of Project-Oriented OrganizationsAre your project teams plagued by turnover, burnout, and high defect rates? Turn your culture around.
Reader Comments About My Newsletter
A sampling:
  • Your stuff is brilliant! Thank you!
  • You and Scott Adams both secretly work here, right?
  • I really enjoy my weekly newsletters. I appreciate the quick read.
  • A sort of Dr. Phil for Management!
  • …extremely accurate, inspiring and applicable to day-to-day … invaluable.
  • More
101 Tips for Managing ConflictFed up with tense, explosive meetings? Are you the target of a bully? Learn how to make peace with conflict.
Ebooks, booklets and tip books on project management, conflict, writing email, effective meetings and more.
Comprehensive collection of all e-books and e-bookletsSave a bundle and even more important save time! Order the Combo Package and download all ebooks and tips books at once.