Outsourcing is Alive and Well and The Same Can Be Said for HR

No longer the threat that it once was, the “O” word is much more easily brought up in polite conversations.

by Matt DeLuca

One of the challenges I saw while designing the HR Outsourcing Certification program three years ago for New York University was the constant concern of HR professionals everywhere I went. They were worried about the future of their jobs and profession. Not me. I was absolutely certain that not only was there nothing to worry about outsourcing, but like the PC it would actually be a tool for HR professionals to increase their value and their professional enjoyment as well. I ran into so many skeptics that after awhile I wondered if I was way off base.

Recently a New York Times article, “Why ‘Outsourcing’ May Lose Its Power as a Scare Word” (8/13/06), caused me to consider its impact on HR once more. Although not singling out HR, the article includes various facts that should reassure HR professionals everywhere. First, when one lumps offshoring with outsourcing, the numbers indicate that only one percent of the U.S. workforce has had their jobs outsourced. Second, those jobs have had a ripple effect in the growth of other related jobs (for example, 125,000 offshore/outsourced programmers led to an increased demand for 425,000 jobs for higher-skilled software engineers and analysts, according to research cited in the article). Third, other countries are running out of workers to do the work.

“China and India lack enough university graduates with the specific skills and experience to meet the staffing needs of Fortune 500 companies,” according to reporter Daniel Gross. The article ends with a quote from Princeton University economics professor Alan Blinder who states that as the industry matures and the technology improves, “… and as the quality and experience of offshore workforces improves, the capacity to deliver services electronically will rise… so we shouldn’t be deluded that this has subsided as an issue… ”

The article triggered a personal reaction that made me reflect on my own take on the HR portion.

• HR is alive and well. The banner HR outsourcing deals of not too long ago have faded into the night, and little information has followed regarding their progress (or not). I would love to learn more about how the IBM-PG deal is doing, among others, and learn more about specific elements that will help our understanding of this enormous undertaking by both parties. But with such big stakes for all involved, that openness is not about to happen anytime soon. It is not that hard to find out how that arrangement is doing. Just get out and keep seeking answers from colleagues, suppliers, and anyone else who may have accurate and current information—hopefully with juicy war stories.

• There is outsourcing and then there are vendor relationships. Vendor relationships are not going away. For a current client, there is a recruiting advertiser that thinks it makes sense to charge $600 for posting a craigslist ad that would cost only $25 if you posted it yourself. It is obvious that some suppliers seek big bucks and are not at all interested in the win-win strategic partnership that outsourcing offers. (By the way, their clients may have just switched accounts with another big name supplier so the perception by both parties appears to be strictly transactional.)

At those same clients, there may be a recruiting firm that is terrified of losing its long relationship over a fired employee who left long after the guarantee period. What a shame that it doesn’t have more faith that their long-standing relationship will survive a little bump like this.

• Keep looking. Finally, be ever vigilant in your search to find better ways to perform all and every one of your HR activities. Make sure outsourcing is an ever-present alternative you are able to consider as part of your ever-present “tool-kit.” Then enjoy the benefits of such an outsourcing arrangement while you constantly seek new opportunities to do so again. Remember, it doesn’t need to stop at HR. Anybody ever hear of the organization, Doctors on Call?

Next month, we’ll look at the Do’s and Don’ts for maximum impact.

Posted November 10, 2006 in Sourcing

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