The Darkest Side of Outsourcing

While writing a post on a topic of personnel impact of the offshore outsourcing I had to go through a rather unpleasant exercise – I had to terminate one of my employees. Termination is never fun, it is particular painful on a backdrop of economy downturn. Through my career I had to let go a great number of people, mainly due to the industry’s downturns / massive layoffs. Layoffs are painful yet the sheer size of the event makes it easier on everyone. Things tend to go much more close and personal when you have to let go someone on a performance basis.

Reaction of the person being let go on a performance basis is very difficult to predict and control. I have seen budges fly in my face, verbal explosions and threats, I have been in situations when I had to call security and once got very close to calling an ambulance. This time it did not go particular well either. The employee got agitated, angry and quite upset with the unfairness of the event. After the termination the direct manager of the employee and I started receiving harassing calls from a blocked number on our personal phones…

Sending jobs offshore is likely to create a few enemies. For example when I introduced offshore concept in Spear Technologies one of my key employees came back with a common in this case blackmail techniques: “I’ll quit”; he did not, just remained never ending pain in the neck. Two other people quit citing offshore decision as one of main reasons. If sending jobs offshore means layoffs things can get quite ugly. Especially if the laid off employees are picked on a performance basis, what is quite typical and the right way to go, especially in smaller companies.

Performance based termination rarely goes well, and sometimes goes exceptionally bad. It was not long ago when a laid off employee took lives of executives of his company in a Santa Clara startup. As my CEO put it “There is too often a thin veil that covers members of society and when the wind blows, the veil can come off. After 10 years in the emergency department I can tell you that apparently senseless violence is hardly rare. The details of this occasion are making headlines but frankly not the violence. Very sad to me is not just the violence but the lack of priority or even care for this guy’s own family. He destroyed more lives than he ended.”

I’ve written about potential pitfalls of outsourcing and will write more. You should move carefully and make educated steps when outsourcing, if your offshoring decision is causing / associated with local job losses be exceptionally careful. You could be making the decision based on spreadsheets and what if analysis, for better good, the company survival and bottom line needs; for you that might mean “nothing personal” yet for those who are about to face job search in today’s market it will be very personal. To minimize potential backlash consider a few general tips:

  • Deliver clear and consistent communications with messages covering reasons, expected goals and objectives, as well as processes behind. The communications should in general precede the events and continue on long past them.
  • Do not cut the jobs across the board. Rather, make the tough decisions to selectively cut jobs. Do not disguise performance based termination as layoffs.
  • Focus on those who stay, yet remember that “survivors” will judge you / organization by the way layoff was conducted and downsized employees were treated

Associating introduction of offshore with layoffs – replacing local workforce with offshore resources is double hit on remaining workforce with inevitable impact on employee morale and overall workforce quality:

  • Employee motivation will disrupted with result in increase in political behaviors, anger, fear – which is likely to negatively impact quality of customer service, performance decline, and decline in quality of work atmosphere.
  • “Survivors” experience more stress due to longer work hours with re-designed jobs, and increased uncertainty regarding future downsizings.
  • Senior and the most marketable employees may leave with result in decline of overall quality and qualification of workforce and loss of institutional memory.

This post was not intended to be “all gloom and doom”. Not many people make offshore decision just for the fun of it. Outsourcing is only one of the tools IT leadership has at its disposal today and as any tool it has its dark side. Knowing that side should help you apply the tool properly and minimize collateral damage.

And the last tip for now – if you are planning to replace some of your local underperforming workers with offshore resources get unlisted – make sure that your personal contact info is not in company directory, white pages, linkedin, resume, etc. – not a trivial task nowadays…

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