IT Outsourcing - The Great Resignation Enabler and the Downfall of the Great American Corporation

Outsourcing is the process of outsourcing work to a third party company or country. Offshoring is similar to outsourcing, except that it involves sending jobs overseas.

Intellectual capital is intangible assets produced by an organization's knowledge workers and represented by their ability to create new solutions and information that add value for customers, clients, partners and shareholders. The term was first used in Peter Drucker's book Managing the Non-profit Organization (1985) where he defined it as "the sum total of the knowledge, skills and experience embodied in its people".

Retention refers to retaining employees within a company so they remain loyal towards their employer by offering them better benefits or incentives than other companies may provide. Often this will involve paying higher salaries so they don't leave for lower paying jobs elsewhere or better benefits offered by competitors who offer more flexible time off work arrangements etc., but could also involve providing training opportunities so employees feel valued enough not only financially but professionally as well if there isn't enough opportunity elsewhere within your industry where you could invest money into things like research & development projects instead."

The Lies They Tell Around The Benefits to Employees

In attempting to sell outsourcing you'll often hear how outsourcing can help employees focus on their core competencies. The company's core competencies are the reason for its success and thus should be what employees spend most of their time focusing on. With outsourcing, employees can be freed from having to worry about things like payroll processing, bookkeeping and accounting, data entry, phone answering services and other day-to-day tasks that cut into valuable time spent doing work that they actually enjoy doing.

Allegedly employees will have more time to spend on more rewarding aspects of their jobs such as interacting with customers or developing new products or services. As a result of this increased productivity, the employee is not only able to do better work but also advance their career in ways that would not be possible if they had been bogged down with these mundane tasks all day long.

Unfortunately this utopian blueprint couldn't be farther from the truth, outsourcing such tasks assumes there is parity in the partner resources being positioned coupled with the same common vernacular, culture, and commitment to the organization.  Furthermore, those purported gains in focusing on core competencies and time savings are not realized as those employees having intellectual capital will spend an increased time spoon feeding and hand holding outsourced partner resources, thus a significant productivity hit.  What used to be a 20-second 1-on-1 conversation now becomes a 2 hour meeting involving 6 people, essentially the "how many people does it take to screw in a lightbulb" analogy.

See "What Are The Myths Of Offshore Development?" for additional insight...

The Reality Of The Situation

The downside of outsourcing is that it can lead to a loss of intellectual capital and a loss of good will. The cost savings associated with outsourcing are often alluring, but they come at the risk that the company's critical knowledge may be lost as well. When employees are transferred or laid off due to outsourcing, they may feel resentment toward their employer.  This can be compounded by the fact that many employees have spent years working on projects and developing relationships with colleagues or clients who now work for competitors.

This is especially problematic when you consider how important it is for companies to retain their best talent: A company should invest in its own internal training programs so that it does not lose its most valuable workers, who are essential for building healthy teams and fostering innovation within an organization.

Outsourcing as it applies to the leaders of the organization will effectively turn into an addictive drug as these self-centered and self-righteous managers will constantly focus all their attention on cost-reductions for the sole purpose of recognition and positioning for potential promotions.

Given the current political sentiment of corporations, it should be noted that the great Charles Koch of Koch Industries mentions in his book Good Profit (2015) that "Good profit results from products and services that customers vote for freely with their dollars, products that improve people's lives.  It results from a culture where employees are empowered to act entrepreneurially to discover customers' preferences and the best ways to satisfy them.  Good profit is what follows when long-term value is created for customers, employees, shareholders, and society."  In essence you can't accumulate "good profit" using watered-down, half-baked, disengaged, gig-economy resources who perform the bare minimum that their contract states.

Ultimately it comes down to an identity crisis for corporations today, is your most valuable asset your balance sheet and just constantly grinding through replacement after replacement of outsourced partners, or do you let actions speak louder than words and truly believe and reward your employees and unleash that untapped creativity and innovation of the "all-in" committed full-time employee.

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