When choosing to utilize outsourcing, a company must first realize the implications of no longer having information and data directly at their fingertips.  For a company that is use to immediate access of all of its information, decentralizing data and its workforce may appear to be a daunting task. This does not even begin to address the issues that arise during the transition period that pertain to knowledge sharing/retention and keeping vendor relations at their optimum. All of which are significant concerns for any company when beginning an outsourcing venture.  There are four simple, yet highly important principles a company must be conscious of to enable the transition of outsourcing is completed in a highly effectual and productive manner.  The following is the first two, look for more in part two of the series.

COMMUNICATION & FAIR PROCESS

While it seems rudimentary to have to state the importance of communication, ineffectual communication is often at the root of most businesses outsourcing failures.  Therefore, when considering an outsourcing venture, an organization should be aware of the implications it may have on current employees regarding their positions and the status of their current responsibilities.  Beginning outsourcing can be a confusing time for current employees as fear of the unknown creates great potential for problems.  Retaining knowledge of the employees who will be dismissed and maintaining productivity within an organization hinges on employee satisfaction.

Studies have proven, that employees work better when they trust the companies they work for, regardless rather they win or lose, when they are knowledgeable of the changes occurring around them.  This is known largely as the principal of fair process (also recognized as the principal of procedural justice).  Employees who learn that are going to be laid off or replaced due to outsourcing will share their knowledge with others more willingly if they are treated fairly and notified in advance of what outplacement procedures and separation pay agreements will be offered to them.

            A good example of the importance of the fair process principle is the case of Siemens Nixdorf Industries (SNI) which is highlighted and discussed in-depth in the January 2003 Harvard Business Review.  Once the largest European supplier of information technology, SNI found their business was facing a huge loss in profits which meant massive cutbacks would have to be made.  Instead of attempting to hide the fact from the many employees they would be forced to lay off, they explained the ominous situation to employees which resulted in a large group of employees voluntarily offering their input and knowledge while continuing to work full heartedly for the business. 

While it did not result in saving most of their jobs, they were able to contribute to SNI being able to rebuild itself into a better company later on based of the input and knowledge SNI still had within their remaining employees.  A company looking to outsource can benefit in the same manner, while they will not be able to retain all of their previous employees, by utilizing communication and fair process, they can impart the knowledge and experience of previous employees into the outsourced employees if a safe, comfortable, and knowledgeable workplace environment exists around the execution of the outsourcing project.

PROPER TRAINING OBJECTIVES TO CREATE AN EFFECTIVE RESULT

Learning to relay and effectively share knowledge between an organization and its outsourcing vendors cannot be underestimated.  The hired outsourcing group should have a firm grasp of what the business they are working for does and should undergo appropriate training to ensure that what they are doing while not being monitored is in accordance with an organization’s vision.

For example, a friend of mine is a computer programmer for a company located in Ohio which recently decided to outsource a significant branch of their IT team to India.  In order to ensure their objectives would be met, they flew a managerial team over from India to study their business and IT activities for three months at the Ohio branch.  Through careful observation, meetings, and training activities, the company felt confident in launching the outsourced team abroad confident that they were fully equipped to fulfill the company’s needs.