Significant Impact on Employees and Business Relationships: Navigating Outsourcing Challenges

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.

Proceed with CAUTION!

Retained and Severed IT Employees

The employees most affected by the change are understandably those who are let go as part of the outsourcing arrangement. Ideally, the company should provide as much advance warning and support for these individuals as possible. Typical options that companies utilize to minimize the impact on affected employees include retention bonuses, transferring to the vendor organization (rebadge), transferring to a business role, job search assistance, and severance packages.

The change will also affect the employees who remain. They will endure a wave of emotions as they see friends and colleagues displaced, some of whom have spent a decade or more with the company. Feelings of anger, hurt, betrayal, and fear that they may be next can overwhelm them.

If not properly managed, the organization might develop trust and toxicity issues, which are challenging to reverse once embedded.

The Importance of a Clear Vision

The ability of the retained organization to establish and execute a new vision with enthusiasm and confidence is as critical, if not more so, than the performance of the outsourced vendor. Typically, the outsourced vendor is hired to take over responsibility for more routine or support activities. This frees the retained organization to drive innovation and deliver value.

If the retained organization does not fulfill that vision, the result will be limited to a cost-reduction activity. This outcome creates little, if any, perceived incremental value.

Business and IT Relationships

Consider how the changes to the IT organization will be felt by the various business representatives interacting with IT. Typical interactions include Help Desk, Application Leads, Client Liaisons, Project Managers, and Business Analysts.

Even if the current points of contact do not change, the attitude of those resources toward the outsourcing provider MUST BE positive and supportive. The business will relentlessly ask, “Why was this done?” IT contacts need to clearly articulate the value that is expected from the change.

Building Support from Leadership

To improve the likelihood of success, IT leadership should secure active support from business leadership from the outset of the outsourcing effort. When issues arise (and they will), having the backing of business leadership can aid in identifying, resolving, and communicating problems effectively.

Business leadership should actively participate in creating the new vision for IT. This involvement will help them understand the business value driven by the new vendor relationship and align on how the business and IT will collaborate to enhance the value established by the outsourcing engagement.

Conclusion

In summary, outsourcing decisions can have far-reaching effects on both employees and business relationships. The feelings and perceptions of retained employees must be acknowledged and supported to foster a positive work environment. Additionally, maintaining strong communication channels between IT and business representatives is essential for a successful transition.

By concentrating on these areas, organizations can mitigate the negative consequences of outsourcing and pave the way for a more productive future. Always remember, creating a transparent and supportive culture during this change is crucial for ensuring that both your employees and your business thrive through transition.

The key to effective management in this context is understanding the emotional landscape and maintaining open lines of communication, allowing the organization to evolve positively.

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