Keeping Talent When Offshoring Looms

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After long debate, it’s been decided: your company is hiring an Indian outsourcer to take over many of your shop’s internal IT and software development functions. Now the question is how to break it to your staff?

If you wish to maintain any morale at all, be totally honest with your staff. The biggest mistake is to try and break bad news gently, fudge the issues, delay making announcements or justify the decision.

It is a smart move to immediately identify key performers, both new and veteran IT talent, and attempt to ring-fence them from any cuts. But bear in mind no matter what you do, the reality is some of your ‘A’ players will move on. One day soon, a plane load of overseas programmers could arrive to be trained by those they are to replace. In such a situation, you can’t expect everyone to willingly give their skills away.

“There will be push back so be sympathetic to it,” said Alan Pelz Sharpe vice president and research director of Boston-based analyst firm Ovum. “Job loss in this climate is always going to hurt people and their families.”

But while job loss is inevitable, there are steps you can take to lessen the damage. Negotiating with management about what functions should and shouldn’t be outsourced is a good place to start. Strongly recommend that management outsource only in non-core areas and retain a dedicated in-house team to focus on business-critical systems.

Another possible tactic to reduce job attrition is to adopt the role of devil’s advocate during meetings with top management. There is so much hype surrounding outsourcing that solid business issues may not have been examined in enough detail. Without being unduly negative, utilize your expertise to factor in all relevant costs to ensure a realistic estimate of savings is arrived at.

“It is all too easy to underestimate the costs,” said Pelz-Sharpe. “Soft costs such as loss of morale and productivity, increased turnover in non-affected departments, can be very costly.”

But bear in mind once the decision is made to move jobs elsewhere, there is only so much you can do to lessen the impact. So, if you can’t prevent offshore outsourcing, the next best thing is to become its master, i.e. put yourself in the driver’s seat by grabbing the project management hat for all offshore projects.

“Project management skills must be stressed to smooth out the bumps and make offshore software development into a truly collaborative endeavor,” said Tom Sundsboe, a director of Moscow-based offshore outsourcing firm Luxoft.

Intel, for example, has a heavy investment in offshore resources. Yet it retains a massive U.S. based IT contingent. Intel advocates the “two-in-a-box” approach, i.e. a project manager from the client company and one from the offshore vendor are constantly involved in face-to-face discussions and eventually think as one with regard to development projects.

By using this approach, Intel has managed to keep its home-grown IT strong. A CIO cannot permit a situation where IT operations internally use one set of rules while an overseas vendor has a completely different mode of operation. Coordination must exist between you and the outsourcing firm. And it is generally up to the CIO to ensure the offshore development partner adjusts to your processes and procedures.

“Using this method, our overall results have far exceeded expectations,” said Intel’s Richard Wirt, who spent 11 years building up Intel’s interests in Russia. “It instills the necessary communication and cooperation to bridge any cultural divides.”

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