The Impact of Implementing a Managed Service Model
There WILL BE significant impacts on your employees (released and retained) as well as your business counterparts. By thinking about these factors in advance and establishing a Change Management strategy you will help avoid these problems.
Managed Service Impacts on Retained and Severed Employees
The employees most impacted by the change are obviously those which are let go as part of the outsourcing arrangement. Ideally, the company should provide as much advance warning and support for these folks as possible. Typical options that have been used by companies in order to minimize the impact on the impacted employees include; retention bonuses, transferring to the vendor organization (rebadge), transferring to a business role, assistance with job search and severance.
The impact of the change will also is felt by those employees which are still retained. They will be dealing with an onslaught of emotions as they will have friends and colleagues that have been displaced, some after spending a decade or more with the company. They will feel angry, hurt, betrayed and afraid that they may be next.
If not managed, there is a chance that the organization might evolve into an environment that has Trust and Toxicity issues, once those are embedded in the environment, they are very difficult to reverse.​
The ability of the retained organization to establish and execute a new vision, with enthusiasm and confidence, is as or more critical as the performance of the outsourced vendor. In most cases, the outsourced vendor is brought on to take over accountability for more routine or support activities, freeing up the retained organization to drive innovation and value. If the retained organization does not fulfill that vision then all the organization is left with is a cost reduction activity that creates little if any perceived incremental value.
Managed Service Impacts on Business and IT Relationships
Consider how the changes to the IT organization will be “felt” by the various business representatives that interact with IT. Typical interactions include: Help Desk, Application Leads, Client Liaisons, Project Managers and Business Analysts.
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Even if their current points of contact will not change, the attitude of those resources toward the outsourcing provider MUST BE positive and supportive. The business will ask “why was this done” relentlessly and the IT contacts must be able to articulate the value that is expected.
To improve the probability of success, IT leadership should gain active support from business leadership at the outset of the outsourcing effort so when issues occur (and they will occur) the business has your back and can help in issue identification, resolution and communication.
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Business leadership should participate in the creation of the new vision for IT in order to understand the business value driven from the new vendor relationship as well as alignment on how the business and IT will partner to drive the enhanced value enabled by the outsourcing engagement.