Is Your Position a Commodity Ready for Outsourcing?

 In my last article I made mention to be wary if your job is easily commoditized and the word “outsourcing” is floating around the office. So let’s discuss some ways to analyze your position to find out how “commoditizable” it really is, because, unless you own the company, your position is on the commodity scale somewhere between easily replaced and possible to replace with extreme difficulty.

The Business Machine

First we need a way to picture a larger company to help us understand the analogy I intend on using here. Large companies can be pictured like a giant machine filled with gears of various size that interface with other gears in different ways. Some gears only interact with the overall machine every now and then, while others interact constantly. There can be entire sections of the machine that operate independently except for an occasional and infrequent interaction.

Each gear is a person and each grouping of gears is a department. Some gears move very fast with a lot of input and output, while others move slower with minimal input and minimal output. Stepping back and looking at the entire machine, we can see that each gear impacts the overall system in some measureable way. Would the entire machine come to a grinding halt if some small gear was removed? Probably not, but the output would be different.

The Cog Material Benefit

Now let’s look at an individual gears, we see that they are each made of different materials. We can think of a more expensive material used for a gear as one that is more important to the overall system. It’s costly to replace and any time that the gear isn’t in the machine the output is vastly changed until it is replaced at great cost. This doesn’t always have to be an important manager or executive, but someone who is critical and hard to replace, like a head programmer or the leading salesperson.

Other gears will be made of plastic, will be small and have redundancy so if it fails the overall output may not change in any real measureable quantity. These gears will be spread out all over the machine interacting in different ways with different gears. To replace these gears you may only have to walk over to the parts drawer and swap it out quickly if needed.

Tying of Gears and Men

Hopefully you can see the machine/business analogy illustrated above in terms of how you fit into your company. Just to make sure I’ll bring this full circle and cover some simple examples of how positions are analogous to certain types of gears.

Someone that processes documents with a simple set of rules for approval and rejection would be a plastic gear. The rules of the behavior are simple to learn and follow. If a document processor were to quit, a replacement could be up and running at previous capacity within a week or two. The overall impact to the business as a whole would probably be so minimal as to go unnoticed.

A person who is the main subject matter expert for a critical project would be a metal gear with system wide importance. If this person were to leave the entire project would stop. The person could be replaced, which would take a long time as far as training and knowledge, or the team could try to reconfigure to make up for the lost knowledge and work effort. In either case, a machine wide disturbance would be felt, with a measurable difference in output.

There are also a select few within a company that can be so drastically important that the entire machine could stop if they were removed. While this is less likely as a company grows, it’s still possible. Is there anyone you know at your company that everything has to go through? Someone that has all the answers that no one else has? There is your gear made of the strongest and most expensive stuff, a gear that may never be replaceable.

An Honest Material Analysis

Think about the three types of gears above, and the infinite range of gear types within them. Which are you? Step back and think about how your work impacts the overall business. Once you have an honest appraisal of how you impact your business you can determine how hard it is to replace you. Are your duties repetitive? Was you training short and simple? If you go on vacation does anyone notice a drop in output?

Honesty with your self is the most important part of this process. Coming to terms with who you are in the machine will only help you figure out your next move, which is to become a more expensive gear. Coerce the machine to be more dependent on your gear’s functionality. If enough processes become dependant on you, the overall machine can’t afford to have a simple plastic gear in the position.

Start small in your aspirations to test the waters of change. Not every machine wants to reconfigure, and if it doesn’t you should take your gear and find a more flexible machine. It won’t take long for decision makers to notice they have a plastic cog doing a metal cogs work.

Circling Back to Commodities and Outsourcing

It should be obvious by now that a company is less likely to outsource something that is not a commodity. A plastic gear is a commodity; a complicated custom gear is not so easily commoditized. Be a complicated and custom gear made of the most expensive material. Be someone your company would have to be crazy to try and replace. Outsourcing a complicated position is …. well … complicated!

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. 

Offshore and Onshore Usefulness When the Inevitable Happens

No matter what you company does, if it grows big enough, at some point a suit will get the bright idea of using a foreign company to offload work on. This will happen, and jobs will be lost. Those who are retained will find themselves facing obstacles they have never faced before on project teams, and will have to accept that their job is now much harder.

The first and most important point is that your company isn't really saving any money. It may look like it on whatever report they are using to blindly look at dollar per hour spends, but the hard reality is that the projects will take longer and have more problems. This will not change a thing though, and you are stuck with your new resources.

The second important point is that you will have to work much harder and longer to pick up the slack. The knowledge transfer will have been terrible, so be prepared to be a professor to your new resources. You will need to go through all deliverables with a fine tooth comb as there will be countless grammar issues, wrong information, and a lot of filler. The language barrier will make every meeting slow an painful, so make sure to set aside enough time for important meetings.

The third point is that no matter how long you work with your new resources, there will always be friction. It could come from the cultural differences in work ethic, it could be a lack of expected initiative, it could be the constant replacement of people that typically happens with large foreign consulting firms. Be prepared and be steady.

The company is really breaking even, and that's only because you are going to have to work much more to pick up the slack. You also know where the blame will go if the project fails, and it won't be the offshore resources.