Implementing Offshore Strategies
Last year Journal articles demonstrated why offshore outsourcing makes economic sense. Global competition means companies have no choice but to find ways to drive out cost if they are to remain competitive. Offshore outsourcing is one way to do this. Outsourcing buyers are adding offshore components to their outsourcing initiatives to continue their competitive quest.
After a buyer signs an outsourcing agreement with an offshore component, there’s still one hurdle left: creating internal acceptance of this radical new way of getting the same old job done. Some employees initially are unconvinced. After all, the processes are different. The physical distances are daunting. And then there’s the threatening possibility that their jobs will disappear.
Sometimes these very real issues seem too much to bear for the company’s workers. Power struggles, employee resistance, and a misalignment of internal interests cause a deep dip in productivity.
We feel the best way for buying organizations to overcome this obstacle is to utilize change management techniques — which are good to know since the only constant in business today is rapid change. Corporations must learn how to adapt to these changes, even those as radical as offshore outsourcing.
What Is Change Management?
What exactly is change management? In the context of outsourcing, it is a program that recognizes the complexity of integrating two cultures and organizations. It is an intentional, proactive process that is also able to reflect emerging issues. It anticipates the predictable dip in productivity that occurs when disruption occurs. A change management program includes a plan to minimize the impact of a painful change like offshoring on an organization’s performance.
To be effective, it is critical that change management involve senior level leadership from all areas of the business. It can not be a program led by the human resources (HR) department. We are the first to admit creating a meaningful leadership investment is difficult. But executive buy-in is crucial. In our experience, if the offshore initiative fails, lack of executive sponsorship is always a key factor.
Conveying the Message for Change
At the outset, the buyer’s leadership has to effectively convey the case for change. This is their No. 1 assignment in the change management program. It’s like the true story of an offshore oil worker whose rig caught on fire. He faced the horns of a dilemma: Should he stay on the rig and perish in the fire or jump into the icy waters of the Atlantic. He decided to jump into the sea and was one of the few survivors. When asked later why he jumped, he told reporters he knew he faced certain death if he remained on the rig. He knew his only chance to survive was to jump.
Corporations today are in a similar situation — they face certain death by continuing to do business the same way. It is impossible for them to successfully compete with others in their industry who reap the economic advantages of offshore outsourcing. The senior leadership has to articulately explain they really have no choice but to jump into the icy waters of offshore outsourcing. They must make their employees understand offshoring is critical to the company’s survival in the current global marketplace.
What if the employees ask questions and the leadership has no clear answer? Our advice: be honest. If you don’t know the answer, admit it. This creates trust and combats the fear, uncertainty, and doubt (FUD) that can be a threat to organizational performance once you announce an offshore initiative. Fighting FUD is important because that fear, uncertainty, and doubt lowers productivity, diminishes morale, decreases the focus on customers, and slows decision-making.
The buyer’s leadership must take the message to all stakeholders in the organization. A good change management program carefully crafts the message so each stakeholder group hears the correct message with the right impact. It allows for two-way communication, giving employees a chance to respond to what their hearing. In some cases, the program allows each group to explore alternatives to assure themselves offshoring is indeed the correct course.
Don’t expect a consensus from these stakeholders; that is near impossible given offshoring’s emotional overtones. However, senior leaders can expect to receive grudging support if they have stated their case cogently enough.
Start Building Support during the Analysis Phase
To reap the benefits of outsourcing over the long haul, each of the employees affected must, over time, become owners of the change. This is done by building and cascading support and understanding from the sponsor group down through the organization.
Through effective communications, people will understand how the changes affect them. Employers should provide feedback loops to ensure the change includes all necessary components. If given the opportunity through user tests or training, people will test the process for themselves. As people transition to their jobs, they will continue to test the new process (this is a critical time for managing the change process); eventually they will buy in to the new ways of doing business. After that, it is only a matter of time before people own the change.
It is important to note that different people will go through this process at different rates. Also, the criticality of gaining ownership may vary from person to person. The change team must actively seek out key individuals and help them through the stages of organizational commitment.
We have found a good way to build support for the offshore decision is early on, during the analysis and supplier selection process. Listening carefully to employee objections allows the senior leadership to gauge the level of resistance and the true difficulty in implementing the requisite changes.
Another way to achieve change management success is to bring in an outside party who can adopt an objective view of the situation. This advisor can predict, anticipate, and diffuse efforts to undermine the change.
The ultimate goal of change management is to build awareness, increase knowledge, drive people to accept and embrace the change and ultimately — to show them how they have ownership in the success of the business — and their careers. Change management helps companies remain in a cycle of continuous improvement. When they finally implement the change, productivity and profits should be higher than they were before the offshore initiative was announced.
Lessons from the Outsourcing Journal:
- The biggest obstacle to implementing an offshore outsourcing initiative is the internal resistance at the buyer’s organization. A change management program helps manage that resistance.
- The success of the initiative requires enthusiastic support and active involvement by the senior leadership.
- Communication is critical. Be honest. Admit you don’t have all the answers. This is the only way to effectively combat fear, uncertainty, and doubt that plagues workers.
- Build support early — even in the beginning analysis.