The Other Side Of Outsourcing

Often one reads of the way that so many tasks are outsourced and the way that companies feel that they can have tasks done by others for cheaper than they can do it for themselves, but often the practical outcome does not match up with the promises that happened ahead of time.  Indeed, just today I had to listen to a fairly long rant from a couple of coworkers of mine about how they want to bring a task that is currently outsourced in-house so that it could be done better.  Even though these are pretty busy people, there is still a recognition that things could be done better even by new people who have to be trained than by people who have no accountability to the way things need to be done.  Part of the appeal of outsourcing is being able to blame someone else for problems [1], but if one is going to accept ultimate responsibility anyway it would be better just keep internal control of it.  Here are some reasons why:

If you’re going to take the blame, you may as well have the authority.  This was the reason that seemed to be at the core of my coworker’s concern.  Part of the appeal of outsourcing is, of course, getting rid of tasks that you don’t like doing and having someone else do them for you.  Sometimes, though, you are the one that is asked over and over again about these tasks even if someone else is responsible for doing them, and eventually the excuse that so and so has to make the changes ring hollow when you are the one ultimately in charge.  If you are unable to pass the buck of questions about whether or not something is being done, then you should have the power to do what you are asked to do, since it is difficult to motivate external partners to have your priorities.  They will do what is most convenient to them and will be under a minimum of supervision so that they do what is profitable or useful to you, and since that is the case that there is always more friction than one would assume in the handoff and accomplishing of tasks, it is best to keep essential and important tasks in house even if they are irritating to do.

Things will seldom be done as well as you would want them done or when you would want them.  In many cases, there is a swan song of efficiency in doing only a few things in house and ten outsourcing as many as possible to those who claim expertise.  Unfortunately, this doesn’t often pan out the way you would hope.  For one, the company that is doing an unwanted but important task is likely not to enjoy it any more than internally, and it will not have the same importance externally because one client will likely be only a small part of their tasks and the payment they receive will likely be on a contractual basis rather than a task-specific basis.  Even if there is friction and tasks are not done to the quality one would like or on the schedule that one would wish, there is a strong disincentive to end such a relationship because it would be an admission that one’s goals of saving costs and getting rid of unwanted tasks was a failure, and may require an increase of headcount internally in order to do the tasks that were outsources, which can be difficult to justify and difficult to attain.  Often you will have a higher priority for the quality of your data and processes than other people you are paying to work on them will have who are at arms length from the company and its reputation, so this is a case where closer is better.

Finally, it will always cost more than you think.  Part of this has to do with the fact that the cost of something not working out well is not only in money but also in time and irritation.  If you have to e-mail someone dozens of times to get something done and it takes days or weeks longer than you could do yourself, then you are not really getting the most out of outsourcing.  If you are promised a low monthly charge on a given service but find out there are hidden costs and fees related to the outsourcing, where you are billed for the added headcount in the company you outsourced a task to, as was the case in one notorious project I was involved in over the course of a couple of years, then you are not getting the most out of outsourcing.  Often what happens here is creative accounting, in that there will be a low cost promise but that promise doesn’t include all the costs, and where there are attempts at creative accounting to make it seem like a better deal than it is.  These kinds of deals usually go sour in the end.  You know the drill:


[1] See, for example:

About nathanalbright

I'm a person with diverse interests who loves to read. If you want to know something about me, just ask.
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