Outsourcing Each Other's Kids

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.

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    Next Issue

Are 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!

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.

Your comments are welcome

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.

This article in its entirety was written by a human being. No machine intelligence was involved in any way.

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:

The Ties that Bind

Changing anything in an organization reveals how it's connected to its people, to its processes, to its facilities, and to the overall context. Usually, these connections reach out much further into the organization than we imagine.

Definitions of Insanity

When leaders try to motivate organizational change, they often resort to clever sloganeering. One of the most commonly used slogans is a definition of insanity. Unfortunately, that definition doesn't pass the sanity test.

Power, 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.

Kinds of Organizational Authority: the Informal

Understanding Power, Authority, and Influence depends on familiarity with the kinds of authority found in organizations. Here's Part II of a little catalog of authority, emphasizing informal authority.

What Keeps Things the Way They Are

Changing processes can be challenging. Sometimes the difficulty arises from our tendency to overlook other processes that work to keep things the way they are. If we begin by changing those "regulator processes" the difficulty can sometimes vanish.

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

Forthcoming issues of Point Lookout

Coming December 13: Contrary Indicators of Psychological Safety: I

To take the risks that learning and practicing new ways require, we all need a sense that trial-and-error approaches are safe. Organizations seeking to improve processes would do well to begin by assessing their level of psychological safety. Available here and by RSS on December 13.

And on December 20: Contrary Indicators of Psychological Safety: II

When we begin using new tools or processes, we make mistakes. Practice is the cure, but practice can be scary if the grace period for early mistakes is too short. For teams adopting new methods, psychological safety is a fundamental component of success. Available here and by RSS on December 20.

Coaching services

I offer email and telephone coaching at both corporate and individual rates. Contact Rick for details at rbrenogMhuqCxAnbfLvzbner@ChacigAthhhYwzZDgxshoCanyon.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:

• Get 2001-2 in Geese Don't Land on Twigs (PDF, )
• Get 2003-4 in Why Dogs Wag (PDF, )
• Get 2005-6 in Loopy Things We Do (PDF, )
• Get 2007-8 in Things We Believe That Maybe Aren't So True (PDF, )
• Get 2009-10 in The Questions Not Asked (PDF, )
• Get all of the first twelve years (2001-2012) in The Collected Issues of Point Lookout (PDF, )

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 500-1000 words in your inbox in one hour. License any article from this Web site. More info