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Recent outsourcing 'embarrassments' recharge shared services
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With the recent spate of negative publicity in the domain of outsourcing, shared services is making a major comeback.
Outsourcing remains as controversial as ever. The outsourcing backlash, which continues to smoulder on and recently has been fanned into flames by the Gourmet Gate debacle at British Airways. Add to that the recent news of the sale of private information by Indian call centres.According to the Guardian’s Polly Toynbee, for example, the Gourmet Gate story should become “a business-school exemplar on how the subcontracting culture can bring down a company.” BA is doomed apparently, because it has “trash[ed] its good name…by contracting out a service that is vital to its marketing success.”
All this is rather odd because The Gourmet Gate affair isn’t really about outsourcing. It is an object lesson in not bankrupting your suppliers, whoever they are. BA used its power as the sole purchaser of Gourmet Gate’s services to drive costs down beyond Gourmet Gate’s ability to respond—principally because of the TUPE undertakings covering the staff it took on from BA. It’s hard to see how keeping catering in-house could have squared that circle.
If commentators want to know what’s really going on with outsourcing, they should look at the lifecycle of any fashion, business or otherwise.
As outsourcing becomes more widespread and mature, and the competitive landscape changes, we should expect some bad or disappointing experiences. We should also expect services to occasionally come back in-house, and the best outsourcing contracts now explicitly recognize this fact. We should expect more sophisticated models—shared services is making a major comeback, as companies try to get the best of both worlds.
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