I understand that a key imperative of corporate ownership or senior management is to reduce payroll expenditures.
Expenditures that to an increasingly corrosive degree, are dominated by health care premiums for employees.
Outsourcing can relieve many of these pressures, but is there a counterbalancing, negative effect?
Well, there could be.
In her new Computerworld article, Judy Artunian lists what she terms the “seven deadly sins of outsourcing.” She canvasses some top-level IT vets for her list.
Here’s a list of these “sins,” along with a bit of info about each from my own perspective:
Feeble governance– Turning over the keys without exercising your right to oversee the practices of the outsourcer;
Overblown expectations– There’s a given tension in play here. In order to get your contract, your outsourcer has labored hard to make the sales case with you that they absolutely hang the moon. You’ve probably met some cherry-picked clients of theirs who are still starstruck. But having unrealistic expectations that your corporate ship will be righted just because you are outsourcing key technical functions to such a company can lead to hubris, and ultimately, to failure.
Blindly banishing projects– The author uses the case of Dell, which outsourced key functions to contractors where English skills were dialectic to a point that key customers didn’t understand. In other words, if you outsource, make sure the communications skills of the outsource contractor are up to snuff.
Dumbly disowning projects– Don’t outsource to the point that key technical knowledge points related to these projects will no longer exist in your company. If your outsourcing arrangement goes bad, you won’t want to have to track down possibly bitter ex-employees and beg them to come back.
Bad assumptions– Write terminology in your contracts that lets you change outsourced technology specifics as underlying technology assumptions, hardware, and software in your business sector changes over time.
Sloppy service levels– The author doesn’t come out and exactly say this, but I will. The best outsourced contracts are the ones in which you won’t have to “nag” your contractor for either workaday service or extra help with special projects.
End-game myopia– As the term of your outsourcing contract ends, there may be “issues.” Maybe you want to renew, spread the wealth around to subcontractors of your own choosing, go for an entirely new outsourcing contract, or bring everything in house. Plus- and this is important- if your outsourcing contract is more than a year or so, it may be that some of your most productive, key contacts at your outsourced tech services provider may be planning to strike out on their own. If so, they may want your business. As you sign your outsourcing contract, make sure you have a reasonably expectation of wiggle room as your contract expires.