Outsourcing is expected to continue to grow rapidly over the next few years, with the global BPO market forecast to reach $180bn (£96.92bn) by 2009. The traditional bastions of outsourcing - IT and finance - are expected to enjoy continued but modest growth, and smaller companies are starting to find outsourcing a viable option. Roles which were previously considered 'safe' are now under consideration for outsourcing, as third party suppliers move into new areas such as product engineering, and legal services it is not surprising that outsourcing continues to be a hot topic on the staff rumour mill, leading to staff concerns about job security and long term prospects. Outsourcing can be a major source of disruption, demotivation and reduced productivity - but does it always need to be like that?
We hear all too often about companies who delay as long as possible telling the workforce about an outsourcing deal to avoid disruption. Companies who do not credit their workforce with the basic intelligence to work out that an increase in management meetings and external visitors mean that change is afoot. These same companies are then astonished at the lack of employee loyalty later on. Not communicating (even if there is no news) can make employees feel 'lied to', so is it any wonder they start leaving at 5pm prompt, taking long breaks and no longer picking up the work of absent colleagues? Other companies tell their employees 'outsourcing is being looked at' and believe this will ensure staff cooperation with the host of additional questions, data gathering and workload that comes with investigating an outsourcing deal. But a single upfront piece of information does not guarantee workforce cooperation. How many outsourcing deals have been potentially jeopardised by an uncollaborative workforce?
So outsourcing has a long track record of communication failure from these different approaches. However it is possible to keep a workforce on track through an outsourcing deal, and case studies show that there are 3 simple messages to help employees avoid the distraction of worrying 'My job is being outsourced, what happens to my career?':
Message 1 - Outsourcing does not equal unemployment
Many outsourcing deals do not result in redundancy, simply a transfer in the same role to a new employer. In such cases, employees' rights are protected by the Acquired Rights Directive 1977, which ensures that workers are entitled to continue working for the new employer on the same terms and conditions, retaining their existing employment rights and obligations. But safeguarded terms and conditions do not make 'being outsourced' plain sailing. The day-to-day the work environment will change, as will the company culture, personal development structures and reward mechanisms. Dissatisfaction with this change inevitably causes an increase in 'churn', with a number of employees leaving voluntarily in the first year after an outsourcing deal. Helping employees to adapt to these differences, through open dialogue and strong change management is critical to maintaining stability in the organisation. Computacenter, who deliver IT Services to BAA were able to ensure almost 100% retention of staff in the first year after transition, thanks to strong employee transition and communication program.
Message 2 - You do have control of your destiny
There are three basic responses to 'being outsourced', all of which are part of human nature - it's hard to predict who will react in which way, and people's feelings and reactions change frequently throughout the outsourcing process. Understanding the basic responses to outsourcing helps to create an environment where employees are more likely to proactively take advantage of outsourcing, minimizing the productivity impact:
The first type of response is
'Cling on for dear life' - probably the most natural reaction as human beings are inherently resistant to change. Employees aim to prove, by providing repeated examples, that their role is too difficult or unique to outsource.
The sooner the workforce understands that there will be no deviation from the outsourcing strategy, the sooner individuals can begin to build realistic coping strategies. Key here is to avoid building 'shadow' organisations, which are both cost-ineffective and destructive to the outsourcing strategy. Employees who successfully 'cling on for dear life' are rarely good ambassadors for the business going forward - demotivation is common as day to day interactions, work processes and status change.
The second response, which can seriously jeopardise an organisation's stability during an outsourcing program is
'Get out while you can'. Staff believe the market is soon to be flooded with 'victims of outsourcing', so leave to snap up the best jobs while there is still a choice - 'change your job, rather than have it changed for you'. This approach is attractive to more dynamic staff who want to feel in control, drive their own destiny and that of the organisation they are dedicated to serving. These are the very people who would drive the company through an outsourcing deal - it is critical to motivate them to stay throughout the outsourcing process.
It is important to encourage such employees to take time to evaluate all options, to review professional and personal aspiration, interests and priorities. Outsourcing can provide an opportunity to take stock and make sometimes life-changing decisions. Good outplacement support and clear communication around separation packages will help employees keep an eye on the end result while the organisation is steered through the outsourcing deal. Experience shows that many employees end up in a better place after outsourcing or other major organisational changes.
Finally, the third reaction is
'Make the most of change', (which is not the same as liking change - few people actually do that). Organisations typically lack experience or expertise in outsourcing activities, so a 'can-do attitude' during outsourcing can provide a career boost to those who take on additional responsibilities such as knowledge capture and transfer, transition and change management, or team leadership. Outsourcing may enable organisations to 'sort the men from the boys' and may throw up some new key players for the future.
Message 3 - Believe it or not, there are advantages to being outsourced
Particularly when a company is outsourced in-situ, and staff simply transfer to a new employer.
Staff will now be employed by a specialist in their professional field, providing better learning opportunities and a wider range of career options, perhaps serving other clients or learning new processes. Outsourcing companies, being very customer-oriented, often provide a better personal, professional and cultural fit for their employees. This is a chance to experience life in another working environment with the protection of uninterrupted employment. Additionally the organisation moves from being a cost centre to a profit centre, generating revenue, which can be psychologically rewarding. It may sound glib, but employee satisfaction surveys show time and again that outsourcing can transform obscure and poorly motivated back offices, into highly motivated operations where staff have a clear sense of the value they provide.
This is no cause for complacency - outsourcing will generate HR issues that need to be actively understood and managed, but outsourcing need not necessarily lead to crippling demotivation and disruption. The key is to help the workforce understand that outsourcing does not automatically mean the end of a career - and in fact it can often be the start of a bright new one. Many employees reflect and choose to do something completely different, enjoying the reward of learning a new skill or changing a lifestyle. Others embark on a learning curve which is far steeper than usual, and which can end in a more interesting, responsible or stable role. Nobody welcomes their job being outsourced, and even the most optimistic have concerns about the impact on their career, but ultimately those who choose to see outsourcing as an opportunity are likely to end up in a better place in the long term. Outsourcing does not have to mean disrupted operations and business results - it can mean stability, growth and a motivated workforce.
About the Author
Rachel Anderson is a senior consultant and payroll outsourcing specialist at Alsbridge Europe, the premier consulting firm providing unbiased advice on Outsourcing, Shared Services and Offshoring. Rachel works on offshoring and sourcing strategies for clients across a range of sectors. Rachel can be contacted at rachel.anderson@alsbridge.com.
