You can outsource the work, but not the leadership

Think outsourcing eases leadership burdens? Think again.

A company decides to implement some packaged software to streamline their financing operations. They decide to outsource the work. The company does a great job working through a disciplined process to define requirements, solicit bids, evaluate vendors, finalize the scope of work, and negotiate the contract.

They hire a brand name consulting company to make it happen. The project seems to be humming along when the projects hits a wall, in what they thought were its final two months. It turns out that the users hate the software and for the next eight months, the project devolves into senior leaders “encouraging” the users to accept the software through education and some minor modifications. The project is eventually delivered but not without a significant amount of organizational angst — it exists today and will continue for the foreseeable future.

The software is late and not accepted by its users. The search for the guilty party settles on the vendor. Everyone agrees they are at fault and resolves to pick a better one next time. Clarify the scope of work and relative responsibilities, they chant. Hold them accountable.

Lessons learned? Case closed?

Hardly. This is an all-too-typical case of the difficulties inherent in outsourcing. Outsourcers have specialized expertise, but they don’t have perfect expertise. After all, they are hiring from the same pool that you do.

When outsourcing, you can’t manage through the contract, you have to manage through the people. Delegating to a vendor is no different, on a day-by-day basis, than delegating internally. You have to stay close in the beginning to ensure that objectives and success measurements are well understood, the approach makes sense, accountabilities and roles are clarified and the team jells. Then you have to stay close enough throughout the project to see what others aren’t seeing, catalyze the right conversations, and ensure that the right mid-course corrections occur.

In the project above, internal leadership believed that their work was done when the vendor walked in the door. They assumed that the vendor knew what they didn’t know — about how the business and IT operated, the legacy systems, the packaged software, and the new technology platforms. And they were completely dumbfounded when the users revolted against the software.

When internal leaders outsourced the work, they made the mistake of outsourcing the leadership of the work as well.

This is a common outsourcing fallacy, but a crucial one to recognize, because it has led many to believe that there’s little need for senior leadership expertise within IT. That is, since IT is outsourced, leadership can be, too. While it’s true that IT organizations that operate with an extensive network of outsourcing relationships have fewer employees, those that remain have to be much more sophisticated in their ability to exert indirect — versus direct — influence.

Is your internal leadership sophisticated enough to make outsourcing work for you rather than against you?

Culled from Harvard Business Review