The Joys of Outsourcing. A True Story

Time to wake up Laddershakers again after a short pause, thanks to an old friend and colleague for an excellent anecdote. This illustrates much of what Laddershakers is about; rather than ditch an inappropriate outsourcing model, the firm moves to a worse one with predictable outcome. No doubt they will cycle round saying the familiar “We didn’t get it right last time, but now we know how to outsource effectively”. It is likely that the firm spent more money hand-holding the vendor’s failed work than they would have spent doing it themselves, not to mention the cost of delayed benefits from the work. Classic!

Dear Robin,

Many thanks for your blog, which I found a revelatory ’emperor’s new clothes’ treatise that resonates with all of us below the truth ceiling.  I just hope that those above that ceiling do read and digest your points.  I started my own IT career at a different major multinational (MMN) from you, but remember fondly the same tightly-run co-located teams, where you had strong connections and commitment to the team goals.  I feel strongly that many years of flawed outsourcing have destroyed this, denied whole cohorts of workers the experience of gaining technical and delivery skills and made us work in demotivating environments where technicians are derided and only ladder shakers and other ‘meta work monkeys’ receive recognition and progression.

Here’s an anecdote from a friend of mine who also works for a major multi-national (MMN) that sounds remarkably similar to the one where you were previously employed.

The MMN has been heavily outsourcing and offshoring IT projects in an attempt to reduce costs.  This has not been a great success, with high costs, schedule overruns and poor quality.   The response of those above the truth ceiling was to introduce an innovative new contracting strategy where the vendor would be held to a fixed cost for a piece of work.

My friend had a business requirement that could have been delivered with (low cost) in house employee capability.   However, he was compelled to award this to the outsourced vendor on a fixed cost, fixed outcome basis.    The vendor duly came back with what seemed to be a very high cost for performing the work.  But, as they were a monopoly supplier, this could not be challenged.

The vendor deployed a multitude of their staff (many of whom were already funded working for other parts of the same MMN) in multiple locations and with a low degree of mutual understanding, communication and trust.  The vendor project manager’s chief interest was in identifying changes to the original scope that could be charged extra as change notes.

My friend and other MMN employees had to provide a high degree of handholding (in this case ladder holding, not shaking) to the numerous vendor staff.  They resented having to do this, as it took a great deal of their time and masked the fact that the vendors could not hold their own ladders.

The project is over a year late, with many attempted deployments into production being met with show-stopping issues.  The vendor’s project team have disbanded and disappeared as they do not seem concerned with receiving the final payment (withheld as the project is not complete).  They are instead working on other fixed-cost, fixed outcome pieces of work for the same MMN (they remain the monopoly supplier), presumably repeating the same cycle.  The MMN has indeed limited their financial exposure (although have still paid a considerable sum) but do not have a working solution over one year after the agreed deadline.

I’d love to hear your stories. Please either post in the comments or email me through ‘Contact Me’. Be careful to obscure details if you need to preserve your anonymity.