Outsourcing: Educating Yourself on Consulting, Offshoring, Onshoring, and use of Vendors

Confusion is very common when any of the above topics happens to be part of a conversation. What do thy mean? How will outsourcing impact me? Whenever any one of the above words is even whispered in the office, you can guarantee rumors will start ruining office moral within the day. The misunderstanding of what these terms mean, and what their impact may be is a stress that should be avoided, and can be avoided by simply educating yourself on what they are.

1) Outsourcing

Let’s start with outsourcing. This is the umbrella term that encompasses all of the other scary words. Most people would immediately picture their jobs being whisked away to India for a fraction of you are currently paid. If you’re a manager and you’re not on top of the situation as soon as this word is uttered, you have an escalating problem. It’s important to know that, while it’s possible that your run-away imagination may be correct, it’s likely that there will only be a change to how you work, not a loss of position.

Outsourcing is a means for the company to reduce its risk by having someone outside the company do a job. It could be for janitorial services, IT development, or even management. Unless you are the owner, a position or duty can be “outsourced”. The decision to outsource is probably going to be made by someone in a very expensive suit, and they will be looking at some charts about how much costs will be reduced if the company considers outsourcing. Once the decision has been made, which will happen as a company grows or matures; they are faced with some options I'll go through now.

2) Consulting

Consulting is normally selected when the need is more immediate and short-term. If you have ever worked with IT development, you have probably worked with a consultant at some time. Some come from large firms like Accenture, while others can come from small partnerships, or even be self-employed. These are people who normally have a lot of industry experience and will fit right into the current structure without much effort.

A consultant probably won’t be around the office for too long. They can be very expensive, but are often cheaper than hiring a full-time, or even a part-time, employee to handle a short-term need. Consultants are great people to get to know during their short stay. They often have a wealth of knowledge and experience that can really help you get perspective on how the current business environment is, and can even lead to possible career opportunities!

3) Vendors

Vendors are usually for a more long-term need of some process that will need support. If your company is thinking about a new system, instead of building it in-house they may just contract with a company to be a vendor to provide the system. This means customization and a long-term support relationship normally. You could be impacted if you are in a support position that will be moving to the vendor (although there is always the possibility of joining the vendor).

Vendor outsourcing probably won’t impact you much at all. It will probably be a little harder on the communication front as the support personal are no longer within walking distance. If you get stuck with a bad vendor, you have my sympathies. The contract is probably a long one, and the desire to move is very low due to upfront costs. Try your best to flex around your vendor’s shortcomings, and expect them to charge for everything not specifically outlined as a service in the contract.

4) Offshore and Onshore

Offshore and onshore are similar enough to be grouped together here. This is where all the big headlines come from when you hear about a large number of people losing their jobs. This means that some large company in another, less labor expensive, country will be taking over the duties of something the company needs to have done. If you find yourself in a position that is easily commoditized, you should now be worried if the word outsourcing is floating around.

Onshore means almost the same thing, except that some of the people will be working in the office with you. Normally these will be the more experienced people from the outsourcing company, and usually serve as liaisons between the business and the offshore resources. I’ve briefly discussed how to work with offshore and onshore resource in this article.

For the foreseeable future, outsourcing will be a fact of life in the business world. When you hear the first whisper about outsourcing at your company, educate yourself on what this actually means for you and your company. Actual impacts are likely to be far smaller on you than what your imagination is telling you.