Shawnee Love   •  
March 26, 2010

Recently I read an article on BNET regarding Google’s decision to leave China which talked about the costs of doing business in China and indicated that many Western projects in China are failures due to “high costs and cost growth, long execution schedules, and schedule slip, and major operability issues”. This article got me thinking about the issue of outsourcing which at one time was argued to be the way of the future and a blog was born.

I should point out that part of my business’ service is to act as an outsourced HR, so I am actually a big fan of outsourcing. And, I am not opposed to outsourcing overseas including the BRIC nations of Brazil, Russia, India & China who seem to be among the “in” places to go for outsourcing work either. I think outsourcing is awesome if your supplier can do a better job than you can with respect to quality, safety, efficiency, cost, etc. However, I am convinced that you should never outsource any aspect of your core business.

I once worked at a winery whose owner broke away from the rest of the industry when he stopped contracting out his vineyard workers and brought them in-house. He went to the expense and put in the effort to train and manage his own crews, because he wanted full control over the grape growing process. Although production of wine was arguably the business he was in, the owner understood that grapes were the foundation of that business and too critical to leave in the care of anyone else.

So in my opinion, when deciding whether or not to outsource, consider first what your core business is and what is critical to that core business. Those are the areas I think should stay in-house. Everything else is fair game as long as you are assured that your supplier is able to meet your standards and specifications on quality, safety, efficiency, cost, delivery time, etc. A colleague of mine makes a living out of what he calls “connected supplier partnerships” where he builds the bridge between the main organization and the supplier to whom they are outsourcing work. His expertise lies in developing and communicating clear expectations, sharing information, managing quality and reducing duplication of efforts through effective reciprocal systems and processes. If you are planning on outsourcing, these are all key considerations to look at before taking the plunge.

Fortunately for me, few businesses consider HR their core business. And while people are at the core of every business, contracting out to a consultant like Love HR can be a cost effective, timely way to develop and implement a new HR program or project. Who needs to develop the expertise in-house if you won’t need to update your compensation plan, employee handbook, orientation process, or management development program, etc. for a few years?