Outsourcing Disasters – 3 Major Conceptual Errors

This is something that outsourcing naysayers would love to rave about, the dreaded Outsourcing Disasters. They are more adept at providing statistical details regarding the number of outsourcing ventures that hit the dirt coupled with heated, critical arguments. So, I will leave the harangues to them.

For a change, why not take a look at this from the perspective of a business? It has been widely known and understood that being in business means to take calculative risks. Much like our first history lesson, “Man is a social being”, I would say , “Business is a social venture”. It is impossible to launch, thrive and flourish a business venture without any association with other businesses. Outsourcing is no different from this, and the businesses that seek outsourcing services are also bound to this principle.

However, listening to the success stories that came out of outsourcing, many enthusiastic business owners started to look at outsourcing as a miracle cure to cut costs and increase productivity. They failed to look deep into the same success stories focusing on the amount of preparation and governance model that was employed, which eventually lead to the success of an outsourcing deal. This eventually led to the germination of misguided outsourcing deals.

  1. Bird’e Eye View :-
    • Most buyers have only the bird’s eye view of the end result. This is fine when you are actively involved with the project. But when this is conveyed to a certain outsourcing partner, a ‘bird’s eye view’ of things is just not sufficient.
    • Most failed ventures will reflect that the buyer has limited the communication to the ‘bird’s eye view’ of things without giving full details
    • Failed ventures will also reveal that ‘multiple mails requesting information’ were looked down upon , and the outsourcing partner stands the risk of being labeled as ‘incompetent’.Beware, you really need an inside scoop to get this information.This reflect the arrogance of the buyer, and not the much hyped incompetence of the outsourcing partner
    • Eventually creating a huge void in communication and leaving everything to assumption
    • Assumptions lead to misguided project management, leading ultimately to the failed venture
  2. The Aspirin Approach :-
    • No one ever thinks twice before popping an aspirin. Same goes for the outlook towards outsourcing among the buyers who want to ‘get things done as fast as possible’.
    • Buyers jump to the conclusion that outsourcing is a quick fix for all their financial problems. Somehow they fail to realize that cost cutting is only a by-product of outsourcing, while the actual objective is to get the process done elsewhere.
    • This requires the buyers to shed the ‘aspirin approach’ to outsourcing and take up the ’surgical approach’ to things.
    • Failed ventures will most certainly showcase haste in outsourcing their project without due the necessary preparation with respect to the governance model required to see the overseeing of the project’s progress.
    • Pop-and-forget may work for aspirin, but attention to detail and extensive preparation is needed when a surgical procedure is being considered. The surgical approach is certainly lacking in failed outsourcing ventures.
  3. Blame the Mailman :-
    • Both parties are dissatisfied at the end of a venture that has failed terribly. The dissatisfied buyer ends up blaming cultural and geographical differences as the reason for failure.
    • I wonder how come these differences did not surface when the deal was being finalized.… Both parties were well aware of the offshore working model. Both parties would have been communicating in the same language (I assume it is English). I am sure that both parties would have had a satisfactory time period before declaring a venture to be a failure.
    • Just as the mailman cannot be blamed for delivering bad news, it is unfair for the buyer and the outsourcing parther to blame each other soley for the failure. Success is result of compatible team-work, but failure seems always to be the result of incompatible teaming with the buyer and the outsourcing partner.
    • With lack of timely communication and information exchange, irrespective of an outsourcing deal or not, any business venture is sure to fail.
    • I would further site ‘ego-centric’ communication within the buyer’s institution as a cause for failure, such as ‘ Since you (outsourcing partner) did not ask for a certain information, I did not think it was necessary to give you’. With this kind of approach, is it fair to blame the mailman ?

Everyone wants to succeed in their business. The buyers want an outsourcing deal to succeed because someone else can do it better for less, and the outsourcing partner wants to ‘be in business’, which is possible only if his client is satisfied with the performance. Both parties aspire for the project to succeed.

My request to the naysayers of outsourcing would be, to consider that every business venture starts out with an aspiration to succeed. It is no different for outsourcing deals. It would be prudent to only look into the actual cause that lead to a certain failure and not thrust the blame solely on the outsourcing partners. I am sure that you will agree that business involves making deals and taking calculative risks. Isn’t this the basic principle of running a business? With every business, there are some great deals and some disaster deals. Then why is it that everyone is coming down heavily on failed outsourcing deals?. Perhaps, that ’s because everyone loves to say “I told you so!”

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