We're outsourcing…but don't tell anyone!
September 22, 2008

In my work in helping companies to develop outsourcing strategies and roadmaps, and the one constant is we have to keep this quiet! When I ask "Why are you outsourcing" the most common answer is "for cost savings." What I tend to discover is that most companies want to grow bigger without growing fatter. Now Fatter is a term I use when you have to expand sites or manufacturing space to take on new work. Some companies really do need to just cut costs and outsourcing is only one phase of a series of cost-cutting measures. In either case the steps are really the same except at the end where you let employees go or reallocate those people and resources to a new product/project.

But the one typical discussion is almost always focused on secrecy of the outsourcing project. Now the really funny thing about telling folks to keep it a secret is that it makes them want to tell someone. This could be to gain some political advantage, because there friends will be effected or just because, but you can count on some leakage. For the most part the rumors will be much worse than reality, but because it affects them, they have to take the information seriously. Should you find yourself in a circumstance that requires secrecy, the fewer people who know the better.

Circumstances aside I almost always advise to just tell the truth and not make a big secret about activities. In-fact if you are trying to grow vertically not horizontally I would much rather include people in what is going on than not. With a decision to outsource overseas you will face some attrition, as some employees would rather work for someone not looking to outsource, but that is very normal. In all cases whoever is involved will divide into two camps, those for and those against. Those against will throw as many roadblocks in the way as possible, usually in the form of technical problems or my favorite "Only Jimmy Can do this" type of response. Those in favor of the outsourcing, will start beating the other guys to remove the roadblocks and before you know it you have firmly divided the office.

The final piece of advice I will give on outsourcing to the point of layoffs is, be prepared to do something for those employees who stick it out until the end. You should quickly identify those employees that you need and offer some type of compensation for ensuring the deal is closed timely and without many issues. ( In a perfect world where corporations are actually trying to keep employees this would be true.  However, in the real world, there are no rewards for the individuals who choose to stay until the bitter end.)

Good luck.