Monday, June 23, 2008

Outsourcing: Great Idea; Lousy Idea; Sensible Idea

A visitor to this site raised an interesting topic: outsourcing. Once I got started on the subject, what I had to say grew into this post.

I'm approaching the idea of outsourcing jobs, or tasks, as a small business owner. And as someone who was one of those 'outsourced' employees, decades ago.

So, as a disclaimer: I'm biased. I like the idea of outsourcing. I was a "Kelly Girl" for a while: wide shoulders, balding head, bass voice and all. Kelly services was a good outfit for me, and, I think, for the business where I filled in. a win-win situation. My current status as a small business owner hasn't changed that opinion.

Outsourcing: A Dangerous Option?

The downside I see with outsourcing is the possibility that an unscrupulous person might get proprietary information, then copy and use it elsewhere.

Well, so could a 'permanent' employee. When I was growing up, the accountant who retired early, to a country with no extradition treaties, was a stock character for writers.

Particularly when the outsourcing is long-term, I don't see much of a difference between an employer paying an accountant and (possibly) managers to keep track of the paperwork involved with employment, and the employer paying a fee to another firm to do the same thing - possibly at the same, or lower cost, and without the supervisory headaches.

Getting Jobs Done Without the Paperwork

Also, outsourcing for a small and/or startup company means that specialists don't have to be on the payroll. When they're needed, they're hired - through an employment agency or directly as contractors. When the job's done, the employer can decide to keep the specialist on a 'preferred' list - or on a 'never again' list, or something in-between.

Outsourcing: If You Can't Afford Employees, It May Not be For You

As for me, I'm going batty: trying to be the art department, marketing, accounting, and editorial staff for my little publishing empire.

I'd love to outsource some of that, but right now I don't have the budget. I'm not even paying me very well.

Local Outsourcing: Sounds Good, but What's "Local?"

The visitor who inspired this post put the emphasis on local outsourcing. I'm not sure exactly what the visitor meant by that. "Local" covers quite a range of ideas.

I live in a town of about 4,000 people. Anything more than a couple miles outside the city limits isn't "local" for me.

Someone living in Los Angeles would have a bigger population in their "local" area, with the greater range of talents and skills that go with it.

I can think of anyone living in Minnesota as being "local," with only a mild stretch of the word's meaning. A little more flexibility, and anyone living in the 48 contiguous states is "local."

For that matter, I can - with an effort - think of "local" as meaning anyone in the English-speaking world.

Which brings up an interesting point.

Outsourcing, Foreigners, and Getting the Job Done

Quite a few Americans (and, likely enough, people in other countries) don't like the idea of 'our jobs going overseas.' I understand how they feel. On the other hand, I don't necessarily agree.

Take tech support as an example. I've had good experience with people who lived and worked in the Philippines and India. They were working with a well-designed set of scripts, and could (1) understand American English and (2) speak a dialect of English that I understood.

Still, the flat-out best tech support experience I've had, for consistently professional and useful service, is a company that uses exclusively people who live in America and speak a dialect that's pretty close to the old 'broadcast standard.'
It Helps, Hiring People Who Speak Your Customer's Language
For bad experiences with people answering phones, including tech support, my prize for Consistently Worst Experience would go to Washington DC, in the late 80s. I had to do quite a bit of calling to the capital during period, and sometimes couldn't understand what I assume to be a distinct regional dialect.

If it wasn't a dialect, federal offices were assigning only those people with severe speech impediments to answering the telephone and dealing with the public.

I've also encountered people who quite obviously learned English as a second (or third) language, have a very limited vocabulary in English: a vocabulary which includes no slang or colloquial expressions.
...and Culture
Another difficulty with overseas tech support is that quite a few of the otherwise-competent people working with Americans seem to have very little knowledge of American culture. And, worse yet, whoever wrote their script seems to have heard of Americans, but never actually seen one.

Priority One: Getting the Job Done

I get the impression that some people in business think that the less money they spend on something, the better. I call them 'bean counters.'

Sensible spending is important, but so is offering a product or service that customers will willing spend money for. More than once.

As an extreme example, let's say that the fictional Amalgamated Information Engineering Enterprises (AIEE) had a good product, and grew into a nation-wide company, with some overseas growth. Someone in Accounting noticed that tech support could be outsourced to Bangalore, saving the company a significant amount. AIEE's top brass never saw that the Bangalore outfit's brochure contained phrases like "best repairing of customer's problems," and "our maximum trained staff give your peoples warm embrace always."

Not smart.

I think that a big reason that 'outsourcing' has a bad reputation in some circles is that it
  • 'Takes jobs away from Our People'
  • Results in shoddy work and inferior products
The first point has some merit. I like the idea of companies hiring from the area they're in. On the other hand, if there isn't anyone in the area who can do the job, for what the company can afford, what's better: for the company to move, taking all its employees; or staying put and providing some positive cash flow for the community?

The second point misses an important truth: Products that are 100% American (or French, or Japanese, or whatever) can be just as bargain-basement shoddy as those made overseas. And, outsourced products and services can (in principle) be just as good as those done closer to home.

And, doing the job right is what's important: not where the job's done.

Am I for or Against Outsourcing?

Yes, and no.

From a strictly dollars and sense point of view, it doesn't matter where a job gets done - as long as it gets done well. I think that stupid outsourcing has given the idea a reputation it doesn't deserve.

Looking at a business as a part of the community - which I do - I think that outsourcing jobs should be done, if that means that the company stays profitable and in the community. I also think that it is a good idea to keep jobs, outsourced or not, as close to where the customers or clients live - and where the company is - both for the well-being of the community, and so that the company doesn't have to spend time, effort - and money - learning how to deal with cultural and linguistic issues.

2 comments:

Crystal Redhead-Gould said...

Great Post Brian!

Fortunately outsourcing is no longer just for big businesses.

Now small business owners, even work at home entrepreneurs are outsourcing their tasks to Virtual Assistants "small business saviors."

By using the services of a virtual assistant, even you, can afford to outsource some of your tasks. By working with a virtual assistant you pay only for the time that you need. So for instance, if you need only 2 hours weekly then you reserve a virtual assistant for only two hours!

To find out more about virtual assistants please feel free to visit me online at http://www.fivestarexecutives.com to request my free ebook Work Successfully With A Virtual Assistant.

To locate a virtual assistant go to http://caribbeanassist.com/hire_a_va.html
to submit a RFP from virtual assistants.

Martin said...

Excellent Post!
You admit your bias, but I think you've got a great handle on the subject.
I failed to define "Local Outsourcing" in my previous comment. In short, it's simply outsourcing to domestic companies. But IMHO the more "local" the service, the better. If I can find good help in my hometown I prefer to do business with them over a slightly cheaper competitor in the next town.
I'm mainly concerned with American businesses shipping jobs overseas for the sake of marginal savings. Of course, I realize international outsourcing is a reality and at times it's a necessity. However, I believe American businesses should make every effort to keep as many dollars in American pockets as possible.

Again thanks for a great post.

Martin

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