The true costs of outsourcing

“I can’t believe what those %#$%*&^ SOBs are doing to me! After 20 years, they’re laying me off. As if that’s not bad enough, I have to train my %#$%*&^ replacement from India if I want any severance pay. I’m supposed to teach him everything I know, and then he goes back with my job. There’s a bunch of us in the same boat. What should I do?”I was happy she hadn’t addressed the question to me. I was thinking the manager who made that decision might want to hire a bodyguard and wear a bulletproof vest, especially if there truly is a “bunch” of them.I’ve worked on a number of improvement projects, where we’ve streamlined operations, freeing up manpower, machinery and floor space. We’ve always gotten an agreement in advance that no one would be laid off. Otherwise the people won’t work with you; they work against you. People have no interest in working themselves out of a job. They can even become militant about protecting their livelihoods. However, if they feel they can look forward to a better job after improving the process, what they’ll do is truly amazing. And that’s how to get the greatest improvement results. You see, someone who’s been doing a job for eight hours a day learns a lot about it the people who designed it never thought of. You want to capture that knowledge, which is often undocumented, and use it to improve the process. That’s how to get the most dramatic and sustainable improvements.So what do you do with the freed-up people and floor space? It’s a fair question, and also the key to continued prosperity. Henry Ford knew the answer, as did a lot of our former business leaders. You’re already paying for them through the revenue from the now streamlined operations. It’s an opportunity to start a new line, a new product or service, with essentially free resources. The machinery may or may not be transferable to a new process or operation, but the people and floor space almost always are. Done correctly, these resources typically begin paying for themselves out of a new revenue stream in short order.Lacking visionThat’s one of the ways to fuel growth, perhaps even explosive growth. All it takes is some imagination and a little creativity. When the managers provide the vision, the people rise to the occasion with the creativity. They often do things they never would have thought they could.That was then. This is now! Far too many of our managers who thought this way are now retired. They are replaced by younger models to be sure, but often these lack this vision. Instead of trying to grow their companies, they’re trying to make pieces of them cost less. If all we can do is shrink costs, it’s tough to build a future. The revenue growers will beat us every time.But getting back to our friend, who is still crying.
What do you think she is going to do? Between sobs, she’s explained this has come as a complete shock. She needs that severance money and is afraid the company will make it difficult for her to collect unemployment if she walks away.She feels trapped, and so will play the game. She will at least make it look like she’s training her replacement. What do you think the chances are she will teach him “everything” she knows?Good luck to the managers trying to set up this process in India! I think they will find some things missing. Too bad the stockholders, employees and other stakeholders will share the pain as well. Outsourcing to India sounded good in the proposal. Just wait till the details, which were never thought of, certainly never mentioned, begin to rear their ugly heads.They’ll probably call a guy like me to help them fix it. If I get the call … well, I have nothing against India, and I’d love to see them do well, but my first responsibility is to my friends and neighbors. I’d be willing to help them fix it, so it doesn’t have to go, or even to help them bring it back. But to fix it over there? I’m sorry. I don’t ever want to need a bodyguard or a bulletproof vest.Ronald J. Bourque, a consultant and speaker from Windham, has had engagements throughout the United States, Europe and Asia. He can be reached at 604-898-1871 or