It's a Project Manager's World Newsletter with Dr. James Brown
      January, 2012 www.SebaSolutions.com Full Moon Edition      

One Dark Side of Outsourcing

In a recent article by Stephanie Overby, of PC World, she identified 7 signs you have outsourced too much.  Number 6 of the seven was “You can no longer answer fundamental technology questions."  Although this article is focused on the IT world this sign is true for all industries.

In my past ten years of business increasingly I have come across “Information Technology, (IT)” people that are not really “IT” people anymore, “engineers” that are “engineers” in title only and “project managers” that are not really “project managers.”

There is nothing inherently wrong with this.  It is often the result of balancing an organization given managerial structure and context.  However, when this is an outcome of a outsourcing decision, the true price must be evaluated.  
My mantra that is repeated in every training class is

“There is no such thing as a free lunch and everything has a price... especially when it is not obvious

Part of the price of outsourcing can range from skills degradation to a total loss of internal skill sets and capability.  This even applies to project management. Outsourcing has become so popular and widespread that sometimes organizations implement it without a strategic focus.  They outsource without considering the long term ramifications it has on internal staff development and capability.

When an organization can no longer answer fundamental technology questions (or project management questions) you have established a level of dependency on contractors that may be unhealthy.  There is no issue as long as your contractor’s are candid, trustworthy and capable. 

Prudent risk management would be not to assume your contractor is 100% candid, trustworthy and capable.

There is significant risk that a contractor (possibly including the one that takes you and/or your boss to lunch) may not be one of these, especially if there is schedule or cost pressure that may impact their bottom line.

It is really no different than taking your car to an automobile mechanic when you obviously know nothing about cars… a certain percentage of the time you will pay for unnecessary work or work that wasn’t done at a high quality level or even work that wasn’t done at all… while getting service with a smile.

Internal knowledge matters

A contributing factor to the failure of some medium to large projects is the lack of sufficient internal knowledge on the part of the organization that is outsourcing work to support the project. 

Many organizations can spend hundreds of thousands to hundreds of millions on a project, but won’t spend a fraction of a fraction of a fraction of that amount developing personnel or even directly hiring personnel with specialized/high level skills to support the activity internally.  In the short term these actions are viewed as “too costly” when probably they have the greatest return on investment of any course of action given what is at stake.

Over-focus on slide-decks

Here is a deadly symptom that shows outsourcing has gone too far in an organization:  When people spend more time with the contractor on the PowerPoint deck that will describe the issue(s) than they spend on understanding the issue(s) itself.  If this “symptom” seems abstract to you count yourself blessed because I suspect more than a few readers have personal recognition of this situation.

If you recognize your organization is internally weak in a particular aspect of technology or project management and you are totally dependent upon a contractor creating and maintain the capability for a second opinion is paramount. Even if you have to outsource the second opinion.

There is no rule or law that says you cannot have a second contractor to provide a knowledgeable unbiased perspective on the first (prime) contractor.  This is simply a sensible form of risk mitigation because there are few situations more precarious when "you don’t know what you don’t know."

Dr. James T. Brown, PMP PE, Author, The Handbook of Program Management- McGraw-Hill

Copyright 2012 SEBA Solutions Inc.  All rights reserved. 

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