| | By Mick James
You'd have thought by
now that outsourcing
would be about as
controversial as sending
your suit to the dry
cleaners, but this
hasn’t prevented a rash
of articles with
headlines like “the
folly” or “the perils”
of outsourcing. Take
Steven Downes, business
editor of the Times:
“Outsourcing has become
something of a dirty
word…especially
among…anyone who has
tried to use the
services of an
outsourced call centre.
Choruses of "I told you
so" were also heard…when
news agency Reuters
moved one of its
departments to India,
and someone there
pressed the wrong button
at the wrong time.”
Comments like this
make me suspect that
there’s a lot of racism
fuelling this debate.
British people clearly
react against certain
accents on the phone—I
doubt they even consider
that the nice Scottish
and Irish people at
their favourite bank may
themselves be
outsourced. And,
frankly, what do you
expect when you entrust
someone with dark skin
with a complex technical
operation like | |
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| | is with the consultants
who advise clients to
toy with the madness
that is subcontracting.
The normally quite
sensible Simon Caulkin
recently wrote in the
Observer that “with
management everything
conventionally regarded
as good is actually
toxic.” Who was telling
us otherwise: “a whole
ecology of improvers -
consultants, IT vendors,
outsourcers and peddlers
of tools of all
descriptions.”
With no apparent
sense of irony, Caulkin
referred to recent study
by “improvers” Deloitte
Consulting, which
suggested that
outsourcing often
disappointed. Since this
survey has become
embedded in the
mythology that
Outsourcing Doesn’t
Work, it’s worth
revisiting its headline
conclusions: 70 per cent
of respondents have had
“significant negative
experiences” (rather
than utter disaster)
with some of their
outsourcing deals, and a
mere one in four were
bringing services back
in-house. Not the end of
outsourcing then, which
must have come as some
relief to Deloitte,
named top outsourcer by
Information Week last | |
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| | year.
All this is rather
odd because The Gourmet
Gate affair—I suppose we
should call it
GateGate—isn’t really
about outsourcing. It is
an object lesson in not
bankrupting your
suppliers, whoever they
are. BA used its power
as the sole purchaser of
Gourmet Gate’s services
to drive costs down
beyond Gourmet Gate’s
ability to
respond—principally
because of the TUPE
undertakings covering
the staff it took on
from BA. It’s hard to
see how keeping catering
in-house could have
squared that circle.
If commentators want
to know what’s really
going on with
outsourcing, they should
look at the lifecycle of
any fashion, business or
otherwise.
“Early adopters”,
whether of outsourcing
or the mini skirt, get
significant benefits
either in profits or
popularity. As others
follow suit, the
competitive advantage
erodes and people who
frankly shouldn’t have
been seen dead in that
style start appearing on
the street. And then the
world moves on.
Similarly with
outsourcing—a lot of the | |
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| | low-hanging fruit has
gone, and companies are
having to work harder to
gain significant
advantage. Worse,
because a lot of those
early success stories
were “no-brainers”,
outsourcing gained
appeal for those
managers who are more
comfortable when not
using their brains. A
badly thought-through
decision is a badly
thought-through
decision, whether it’s
outsourcing your call
centre or buying a
safari suit.
As outsourcing
becomes more widespread
and mature, and the
competitive landscape
changes, we should
expect some bad or
disappointing
experiences. We should
also expect services to
occasionally come back
in-house, and the best
outsourcing contracts
now explicitly recognize
this fact. We should
expect more
sophisticated models:
shared services, for
example, is making a
major comeback, as
companies try to get the
best of both worlds. And
we should hope that the
armchair pundits would
move on to something
else.
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| | button-pushing?
Take this unpleasant
undertone away and
you’re left with the
fear of the new. If
you’re mugged in the
street, well, it’s a
tough world. If your
online bank account is
“phished”, it’s the
Internet’s fault. We
should never have
changed the existing
order of things; we have
brought destruction on
our own heads by
meddling.
According to the
Guardian’s Polly
Toynbee, for example,
the Gourmet Gate story
should become “a
business-school exemplar
on how the
subcontracting culture
can bring down a
company.” BA is doomed
apparently, because it
has “trash[ed] its good
name…by contracting out
a service that is vital
to its marketing
success” (In-flight
catering? Really? I’d
rather bring
sandwiches…).
The blame, of course | |
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