Outsourcing is often blamed for the loss of jobs, but is this a fair assessment?

The article draws coloration between outsourcing and job reduction. Outsourcing may be a cost reduction strategy but not an HR transformation strategy. If a private company can do the work better it only means that current operations is inefficient. By outsourcing it, you essentially get your hands on new capabilities to do it better by leveraging someone else’s investment and know how.  And that is good news for you.

If the number of workers will be affected by outsourcing, which can be the case in certain situations, then you require an HR strategy to go along side it.  Once again, outsourcing is not a human resources alignment strategy

The job losses mentioned in the article are probably surplus  due to an economy on a downward cycle. The government could decide to keep them if they wanted to. Blaming them on outsourcing is just the wrong thing to do.

Renown outsourcing relationship and management expert Andy Akrouche discussing a February 20th, 2012 Canadian Business article “Analysis: Layoff talk sidestepped in outsourcing

When you have been in this field for a certain length of time and hear something long enough – over, and over and over again, you can actually start to believe it.

Such is the case with outsourcing in that along with shared services, the strategy has often been villanized as being the reason for workforce reductions.  This is of course not entirely untrue but not for the reasons one might suspect.

Unfortunately, far too many organizations have missed the point and the benefits of an outsourcing strategy by oversimplifying the process to one of merely transferring responsibilities for key enterprise functions to a third party in an effort to boost bottom line financial performance – especially during a down economic period.  Do not get me wrong, cost reduction is a definite element of a successful outsourcing strategy, however by making this the sole focal point is tantamount to only seeing the tip of the proverbial iceberg.

In essence, outsourcing’s perceived benefits have been reduced to the ridiculous in the extreme in that it is viewed as being a reactionary tool as opposed to a proactive realignment of company capabilities that collectively, when managed properly, deliver substantially improved levels of service and increase profitability.

Sadly, the former perspective is the one that like the article to which Akrouche refers, is the usual headline grabbing angle most stories take.

In truth, outsourcing is an incredibly important vehicle provided that it is recognized as being as much an HR transformation strategy as it is a cost reduction mechanism.

Over the next week I will be taking an in depth look at outsourcing and shared services through a series of posts.

In the meantime, I would encourage you to share your experiences with outsourcing whether it be through either direct or indirect involvement.

Be sure to check out SRS’ new Source Relationships Not Deals Seminar . . .

“This seminar bridges the disconnect between executive vision and practical front line execution. It is unlike any I have seen or been a part of.”



3 thoughts on “Outsourcing is often blamed for the loss of jobs, but is this a fair assessment?

  1. I have used off-shore and on-shore resources and in some cases I had to turned performance around. I would not comment onto good and bad of it. What I want to point out is that if you do outsouce, the key to success is management process.

    Most of the cases, outsourcing neither saves you money nor quality. Some have said that it infact costs more time, money, quality. That is what I was told when I took over the overseas team.

    In the end, a change in the management process, structure, and reallocation of work portfolio made it better than what it was supposed to be in the first place.


    • I agree completely. This is why we introduced relational outsourcing where the relationship is the pivotal point around which service delivery is structured, managed and evolved over time. The problem with traditional outsourcing arrangements is that they are structured as a deal or a transaction that is expected to do magic in some particular way. Cheers


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