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Offshoring? Not in My Backyard.

July 12th, 2007 · by Tim Minahan · 3 Comments · best practices, outsourcing

Supply Excellence is pleased to welcome back Sarah Pfaff. A long-time consultant to the world’s leading companies, Sarah now heads Ariant Consulting Group (www.ariant.com), which specializes in strategic sourcing, procurement transformation, and outsourcing strategy.

In previous posts Sarah advised readers on how to define internal processes and how to build a business case for outsourcing. Today, Sarah gives tips on how to tame stakeholder emotion and biases when making offshoring decisions.

Is it possible that the emotion around Offshoring is really one of the reasons for the offshoring “failures”? And could it be that this emotion gets in the way of good planning in the Offshoring process?The other day I met a new business colleague. We were trading the obligatory background information and viola they asked:

“What do I do?”

I explained I work with companies on their offshoring initiatives.I got the usual first response – “I hate it when I call my XYZ provider because I always get someone with an accent I can’t understand.”I used my standard comeback: “How do you know that this person with the ‘non-understandable’ accent isn’t actually based in North America?”This led to: “Well, I heard that offshoring doesn’t work and that many companies are coming back.”Ok – so here’s my question: Since people get so emotional about offshoring is it possible that during the sourcing process we inadvertently expend too much effort addressing the wrong concerns and not enough effort on the business issues that would really make the offshore environment a success?

Let’s be straight forward: offshoring does mean moving jobs to another country and that does upset people. But with the clients I’ve worked with, the people whose jobs are moved usually are the least upset. They get transferred to new jobs, get severance pay, or some other type of compensation that make the job loss acceptable.The people who are VERY upset about offshoring and remain upset before, during and after, are the managers. I’ve always wondered how this impacts the ultimate success or failure of the offshoring. What these people miss are the non-cost benefits of the offshoring – expanding the services, providing more coverage, improving processes.

How can companies deal pro-actively with this deep-seated emotion? We often talk about Change Management but often it’s used as a name for communication plans that are targeted at the people who will be losing their jobs, not the people staying behind and critical to making the Offshoring work.

We also don’t like to spend a lot of time focused on developing new processes and building new functions for working with colleagues who will be thousands of miles away, on a different continent, working at night while it’s our day, maybe working for a different company, and worst of all, with a “difficult to understand accent.” But this is the issue we need to address because these answers are typically not already developed. Other than using some of our workplace diversity programs, they usually aren’t sitting ready and waiting in a manual somewhere.

In the end, I think we need to admit sometimes we’re our own worst enemies. We can make anything work that we want to – and we can make anything fail that we want to. Change Management is not simply communications – in this case, it’s getting people to plan for making the Offshoring work rather than planning for the repatriation.

Thanks Sarah, for tackling these tough issues. The whole offshoring issue reminds me of the current windpower debate on Cape Cod. Residents love the idea of alternative energy, so long as it doesn’t affect their view or property values. (The old NIMBY — Not in My Backyard — argument.)

Offshoring carries similar emotional baggage. Companies like the idea of labor arbitrage and lower costs, so long as it doesn’t create competition or uncomfortable change for them.

Once again, Sarah, you’ve challenge Supply Excellence readers to get out of their comfort zones and rethink their sometimes emotional (and irrational) strategies. Those businesses that take your advice will be better for it.

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3 responses so far ↓

  • 1 Supply Excellence » Supply Now: An Insider’s View of Outsourcing // Jul 17, 2007 at 7:58 am

    [...] In the latest Supply Now podcast, strategic sourcing and outsourcing expert Sarah Pfaff shares the do’s and don’ts of outsourcing. A founding partner at outsourcing consulting boutique Ariante – and recent contributor to Supply Excellence – the straight-shooting Pfaff gives tough advice on how to build a real business case for outsourcing and how to tame the emotional resistance to offshoring. Her tips are a must-hear for anyone in the throes of an outsourcing decision. [...]

  • 2 Chris // Dec 30, 2007 at 6:49 am

    Do you hate outsourcing because you’re a racist? I wonder what’s wrong with your ear? You can’t understand English just because it’s accented. I am a Filipino but I don’t have trouble comprehending a Chinese-accented English or an Indian-accented English. It is still English anyway! Offshoring and outsourcing exist because you can’t perform your jobs well.

  • 3 Tim Minahan // Dec 30, 2007 at 10:59 am

    Chris:

    I believe that you have completely missed the point of Sarah’s advice. Her point is that outsourcing often fails because of the very ill-conceived stereotypes that you are ranting against. She is actually saying that people — from executives to frontline employees — need to move beyond any preconceived biases and make informed outsourcing decisions based upon core business competencies — including the lack of these competencies or efficiencies internally and the enhanced capabilities and scale of an outsourced service provider — whether they be in Peoria, Berlin, or Manilla.

    In addition, Sarah adds that companies need to spend time prior to outsourcing to defining their own processes, intended results, and turning cultural, language, and time zone differences into a positive advantage.

    The point is that, in today’s global environment, outsourcing is a key component of business success. To ensure successful outsourcing relationships companies must make fact-based assessments and business decisions and establish clear processes, metrics, and policies for ongoing relationship management.

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