Outsource and be damned?

In his book on photography, Another Way of Telling, the art critic John Berger describes stories as discontinuities based on tacit agreements about what is said, and what connects the discontinuities. For Berger, the teller of, and listener to, the story are not at its centre; it is whom the story is about. One can draw an analogy with the story of outsourcing of business and organisational functions. Frequently, the tellers and listeners of the story of outsourcing do not get to its centre: the appropriateness or otherwise of this business model.

It is a model around which a rhetoric has been created which states that it is the transformational solution to contemporary business problems. We have been here before, with re-engineering in the 1980s; lean and agile management; and the new service organisation. The reality of outsourcing is a little more grounded, and there is often a confusion and a conflation between outsourcing and off-shoring: sometimes they are the same thing and sometimes they are not.

Similarly, outsourcing is popularly associated with call centres (or contact centres, as they are now euphemistically called). You could argue that dealing with the frustrations of dealing with customer services, based upon call centres, is the psychological equivalent of a contact sport in modern life, but call centre are not the story of outsourcing.

Jupiterimages

Are call centre frustrations a result of outsourcing?
[Image: Jupiterimages]

Outsourcing is the devolution of organisational functions to third parties which have advantages and disadvantages.

Advantages include:

• Operational cost efficiencies by focusing on core activities;
• Access to intellectual property, expertise and skills not available internally;
• Distributes risk and frees up cash flow

Disadvantages include:

• Increased transactions costs of ensuring consistent quality of output or service, and a larger span of management control
• Possible loss of intellectual property to a potential competitor as outsourcing company goes up the learning curve of business or sector
• Deconstructs integrated business into operational silos with possible loss of overall strategic focus
• Reduction in value-added as expert staff and their heterogeneous knowledge are replaced by staff with general functions

This list is fairly obvious, so is there another way of telling the story of outsourcing? One way of going beyond the obvious is to look at publishing and its future.

Publishing is a huge global industry that produces and disseminates information using a range of media and mediums. It has been in the forefront of outsourcing, be it production or distribution for a long time. Yet, there appears to be a loss of confidence in print publishing, in particular, as the Internet and its assurance of further outsourcing of core functions, as it promises that anybody can become a publisher. Beneath the rhetoric, something more prosaic lurks and that is the silver bullet question.

In the same way we have been promised that the genome code will be cracked, businesses and organisations think there is some silver bullet that will crack the business DNA. For many in publishing, the digital world would produce an armoury of silver bullets: just set up a web-site and just watch the money roll in. Yet the real world of music production and publishing appears to be threatened, as evidenced for the financial difficulties of EMI and even the internationally powerful News International Corporation is reacting defensively to the challenge of how to generate revenues from on-line content.

Again behind the rhetoric, we find reality to be a commonplace as ever. Real and virtual publishing are complements and not substitutes, and outsourcing of, say, human resources or marketing or finance may ensure a more efficient management of resources. The danger is when the producers and purveyors of content are outsourced to cheaper substitutes, then the core business is being weakened.

The key issue for outsourcing is the partnership between the outsourced and the outsourcer. It can be the basis of innovation as good practice is exchanged across organisational boundaries. The challenge is to manage the permeability of these boundaries, which may, in extremis, be mutually disadvantageous.

Arthur Wellesley, the Duke of Wellington, famously said “publish and be damned” in response to being blackmailed. Too many businesses and organisations, whether in publishing or other industries, seek to outsource and be damned, without thinking of the consequences: bullets - whether silver or not - are frequently fatal.

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