BBC news carried a commentary recently which provides a salient warning for outsourcing strategies.
In the wake of the Gulf oil spill disaster, it was noted that for outsourcing to be successful, it was essential that an organisation had “contractor management” as one of its “core competencies”.
The commentator went on to characterise the disaster as a “management failure”. How could BP have avoided the disaster? By modelling the contingencies, he said.
Would that have sufficed in your organisation? For BP it did not.
This highlights one of the often-overlooked perils of outsourcing. It’s not just internal contingencies that need to be taken into consideration. In BP’s case, although they weren’t the organisation on the ground (so to speak), it is their global brand that bears the burden – externally and worldwide.
Last week I read analysis that suggested outsourcing had largely peaked (within the BI sphere). But management models come and go in waves; there has certainly been an amount of reinstitutionalising of hitherto outsourced functionality. Anecdotally, some of the reasons mentioned included the cost reductions not meeting expectations – and the difficulty maintaining functionality to a sufficient standard compared to inhousing.
Is contractor management a clear core competency of your organisation? Are the risks sufficiently modelled, understood and accepted? Can your organisation withstand a BP-level crisis originating externally? Or are your management processes more robust when functionality is maintained internally?
