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Outsourcing failures often not published but it is so easy to make it right

Had yet another meeting last week where the top guns were telling me about the failings in their outsourcing project. Many times now I have sat in meetings and heard depressing stories about the real problems faced after an outsourcing transfer.

Recently Zurich did warn that organisations should ‘prepare for two years of IT disruption’ when they outsource. However, this type of press is rare. Most of the conversations I have are absolutely dire, with very poor performance and real relationship problems creating conflict and reverting to strict contract rules. However as soon as I ask about quoting people I am told ‘The only thing I could say to be quoted would be the good things’. This means of course that many organisations go in to an outsourcing contract without fully realising the problems that others are experiencing.

Our own research has suggested the following issues can exist for organizations after an outsourcing transition:

* Lack of organizational learning and ‘memory’,
* Reduction in innovation,
* Reduced long term responsiveness from staff,
* Poor negotiating, linked to above and cultural differences (both organizational culture and national culture, especially in off-shoring),
* Anxiety and low performance for remaining staff (survivor syndrome),
* Intangibility of services can exacerbate conflicts between clients and suppliers,
* Difficulties with relationships with (ex) colleagues,
* Outsourcing viewed as ‘failure’,
* Misunderstanding of roles,
* Issues around career development,
* Financial losses due to contract misunderstandings and relationship history.

There are some really good tips on the link below about how to renegotiate when things go wrong:

Computer Weekly

However, there are still problems, as in the real world careers are made or broken on these large contracts, and trying to renegotiate, especially shortly after doing the deal, is an admission that things are not right and (potentially) you made the wrong choice. Not many managers are brave enough to do this, they put their careers before the company (more about this on the psychology blog I think…)

Anyone else had this experience, or any views?

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