Mark McDonald

An attendee at the Gartner Symposium in Cannes last week handed me a piece of paper and said “write about this in your blog” so here goes.

The person did not give their name so I hope they see this post.

Question: In a world where we are faced with throwing away our people through outsourcing, how can we make people our top priority?

The question is a good one as people are a significant factor in the IT and enterprise effectiveness.  Outsourcing creates at least an “arm’s length” relationship between the retained IT organization and outsourcing staff, many of whom used to be your employees. This creates a conundrum, as people are my most important asset, yet I no longer control that asset, its development nor its investments.

Here are a few thoughts and observations.

Invest even more in the people you have

It sounds harsh, but concentrate on the retained organization first as their performance is the most important in an outsourcing relationship.  The retained organization, ala IS Lite, can be an after thought or those ‘left behind’ after the outsourcing.  The exact opposite is true.

The retained IT organization is the remaining significant point of leverage responsible for directing and managing outsourced services.  Andy Kyte at Gartner points out that often these people are out-manned; out-skilled and out-gunned in relation to the outsourcing account management resources they work with.  He is right.  So here are some ideas:

Concentrate on building key skills in the retained organization in vendor relationship management, architecture, service management and the like.  Make them the enterprise experts so they have the knowledge and confidence to connect what you enterprise needs with the services provided by the outsourcer.

Retain the responsibilities that drive your enterprise economics and performance.  Responsibilities for deployment, benefits realization, business process management and others unique to your operations need to stay inside rather than moving to an outsourcer.  Outsourcers may provide the army to do the work, but you need to be the generals and officers directing their work.

The retained organization needs to be the A+ team, not the leftovers from the outsourcing deal.  This means that they should get upgraded positions, pay and investment.  It should be a promotion to be in the retained organization and not a group of people who feel that they were picked last at dodge ball.

A rule of thumb is that the retained organization should have a budget of between 15 – 20% of the outsourcing contract.  For every $1 million outsourced an investment of $150,000 to $200,000 in the retained organization.  It is just a rule of thumb but it gives you an idea of the level of investment required.

Recognize that the way you contract does not have to be the way you work

CIOs who report having success with outsourcing see having “one team” as a reason for that success.  A one team approach is based on how we work together, which is as one team, rather than how the services are contracted.

This concentrates mostly on the program/project and portfolio aspects of day to day working that the I will admit that having one team is rare, but if you can establish that as part of the foundation of the outsourcing relationship you are in a better position.

Ensure your outsourcing partners are living up to their people investments.

Your outsourcing contract should have skill and training requirements for the people working on your account.  Make sure that they are living up to that part of the bargain, that the people are qualified, receiving training and most importantly being oriented toward your account.  Raise the issue if they are not and take corrective action.

Do not expect too much from outsourced resources or their management.

It is easy to expect too much from the outsourcer, particularly when they hire many of your people.  Recognize that outsourcing economics derives from standardization and scale rather than customization and service.  Outsourcers value the interchangeability of skills as they can move those skills across accounts.

Outsourced staff are not “thrown away” unless you choose to dismiss them and their skills.

You can and should seek to work with them as one team, ensure they have the right skills, but you cannot expect too much.  This is why you need to invest more per person in the retained organization, as those are the people you have and the future of your organization.

To the person who put the paper in my hand, please let me know if this answers the question, if not happy to add to this response.  And thanks for asking.