Tell me again why you are outsourcing your work? Oh, yea, it’s cheaper. But what are you losing?
Over the years many US businesses and the US Government have been outsourcing their work. This outsourcing comes with a cost…
Businesses outsource for one or more of the following reasons:
1. Capacity: They cannot hire anymore employees because of the color or money, because of lack of space, or because of the limited duration of the work, but they need more capacity to get the current or future expected work done. Outsourcing provides scalability.
2. Capability: They lack a specific skill set within their current pool of employees, like strategic planners, process improvement experts, education and training, scientists, project managers, etc. This requirement, although normally needed for the long term, is often sourced for short term engagements. Normally these people come in to provide a service, but the business can’t afford what they really need so they tend to accomplish much less than desired or required.
3. Cost: It is cheaper to outsource work to a third party on shore, near shore, or off shore. Why, because they turn the process that you have seasoned and higher-paid employees doing into a manufacturing-like process with high turn-over potential because of a low pay. These companies operate on a margin that is extremely tight, so they are focused on leaning out the work as much as possible. This is seen as efficient, but doesn’t always end up as effective.
4. Not Core: Sometimes, an organization wants to focus on only the core work that their company does and turn to experts in the non-core space. For instance, accounts payable is something that every company has to deal with, but a single company can only be so good at it. A third party that specializes in accounts payable work; however, does this for many companies so they have expertise in this work and know all the industry-leading and innovative approaches to the work. Outsourcing to them allows the organization to focus on their products and services versus some other common process across businesses.
So, as you can see outsourcing has valid and perceived lucrative reasons. However, what is the one thing that you’re outsourcing when you turn over work that will never exist in this line of work again?
Your Culture.
Let’s say your company today is all internal employees. Everyone of them is working’ theoretically for the benefit of the company and specifically for your customers. They are, hopefully, focused on your mission and vision and delivering value that your customer expects.
Outsource that…
You will not get a third party to buy into your mission and vision. They won’t connect with your customer. They have their own mission–normally it’s to provide whatever services you desire because they can always hire more people when you can. Their vision is to get bigger off of your work and the work of others. Their customer is you and every other company that has outsourced to them…not your customer!
Yes, there are benefits to outsourcing–especially short term benefits–and the reasons can be valid and strong. However, every employee or potential employee that you replace is one that could be focused on delivering on your mission, meeting your vision, and connecting with your customer.
Even if your employees today are not doing those three things, that can be fixed. It takes leadership to drive those behaviors, but you can still get that from your employees. Outsource them and you’ll never get that from the third party.
Outsourcing is a short term solution with long term effects. Beware!