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Outsourcing is set to boom. Google is to cut 12,000 roles this year; Meta plans 10,000 layoffs in addition to the 11,000 it has axed; and almost 15,000 jobs in British retail have gone since the start of the year.
But while businesses have identified the commercial need to downsize, they will be keen to maintain momentum. Outsourcing for the interim and the long term is a way for firms to claw back growth.
While outsourcing technology and process-based departments such as IT, payroll and recruitment has been a mainstay of big and small businesses, the trend is to include senior finance leadership, marketing and more general business operations, as Forbes predicts. For example, cycling brand Zwift’s recently announced 15% workforce cull will fall largely on marketing and HR, while tech firm Atlassian’s latest cuts are to affect talent acquisition, programme management and research and insights.
Downsized companies stand to get their outsourcing wrong if they focus too much on KPIs (key performance indicators) and SLAs (service level agreements) as they fill their resource gaps. It is also crucial to have an alignment of company culture and values to work towards a shared vision that is built on trust.
Outsourced team members should be treated the same as internal staff to get the best results
So says Richard Skellett, founder of the Globalution Group of consultancies, which provides outsourced solutions in IT, recruitment, research, training, marketing and people management. Just this month Skellett was called in to advise two large British city councils regarding the failure of two long-term, big-ticket outsourced contracts which he attributes to those factors.
“A poor culture fit can lead to misunderstanding and conflict which delay project delivery and have a negative impact on the quality of work. So it’s important that everyone is on the same page,” says Skellett. He adds that outsourcing can only be effective with clear communications, operational oversight and a strong culture and values match for longer-term projects. This includes adding outsourced partners to team communication tools and setting expectations on areas such as how to give status updates, dealing with urgent requests and what response times should look like.
The role of outsourcing in the company of the future
Skellett says it is crucial to get a handle on this now because outsourcing has an important role in the future of business, looking at ongoing mass layoffs. Out with the current model of a large permanent headcount and its associated expenses and duty of care. In with the ability to dial resources up or down through partnerships that focus on timely requirements for skills.
It’s a model that Skellett calls “mutable”, where a business is in a permanent state of reinvention to match the increasing volatility of the world around it. A mutable business working with several partners could, Skellett theorises, adopt a ‘command-and-control’ model where they push KPIs and SLAs with penalties for non-compliance – but this is not ideal.
The alternative, he thinks, is a partnership-driven model of working collectively with a strong outcome focus. This could then be tied to incentivising the outsourcer with rewards to be shared for achieving those outcomes.
Keeping outsourced teams in the loop
Skellett’s mutable model dovetails with the current demand for remote and flexible work, which has clear benefits for both team members and organisations but can cause communication breakdowns when outsourced talent is not integrated properly. That’s the observation of Kelly Lawler, vice-president of sales at WorkReduce, a US-based firm which provides marketing capability as an interim or long-term solution to both brands and agencies.
Lawler points to advertising agency networks such as WPP noting in its Q3 2022 trading update the increased use of contingent workers as a way to protect clients from inflationary pressure, but clients saw a misalignment when expectations are not met because of poor integration.
“Outsourced team members need to be treated the same as internal staff to encourage collaboration and boost morale, to get the best results,” Lawler recommends. This includes attendance at team status meetings, and company-wide meetings in certain cases to understand the business trajectory.
“Too often, it’s the verbal nuances from discussions that are missed in meeting summaries that can make the biggest difference. Being a part of meetings will lead to efficient onboarding, decrease ramp-up time and allow them to ask questions, and brainstorm with the team to improve the quality of work.
“The sooner you can provide access to the relevant systems, the sooner your external talent can start performing the function they were hired for.”
Over the past three years, Lawler has seen improvements in how companies work with outsourced teams. With remote work becoming commonplace, the timing to incorporate outsourced talent has shortened and the process for that has become more efficient. She also notes how the pandemic has accelerated this trend, with more companies investing in automation, process documentation and effective communication tools for internal and external team members.
Innovating how outsourced teams look and function
Unilever is an example of a multinational corporation with a strong track record of outsourcing areas such as IT and HR in long-term, multimillion-pound deals with the likes of IBM, HP and Accenture. Case studies have outlined how the business established which functions to outsource so it could prioritise strengthening its competitive edge in brand and product. It then ensured close interaction between internal and external teams for a successful collaboration.
People want flexibility in the type of relationship they have with their employers
Yet perhaps mindful of how outsourcing might be mishandled, as Lawler and Skellett underlined, Unilever has developed an innovative way to fill resource gaps. Open to current and past Unilever employees, its flexible staffing model U-Work allows people to move across projects as they arise, plugging skills gaps while driving diversity. They are paid both a project fee and monthly retainer, while accumulating annual and sick leave. Under the scheme, people can also work for themselves or another company, as they aren’t considered permanent staff.
“We recognise that individuals want flexibility in the way that they work. And I don’t just mean in a hybrid or remote way but how they work and the type of relationship they want with their employers. At the same time, we wanted greater flexibility in some of our resourcing,” explains Morag Lynagh, Unilever’s future of work director. “We looked at what we have already. On one hand, we have the gig economy, which is fully flexible, but limited security. On the other hand, we have regular employment, which has lots of security, but less flexibility. And what we’re trying to do with U-Work is find that sweet spot in the middle.”
Going beyond joining the dots
Whatever the model, businesses will have to work out how to manage multiple outsourcers of services in an integrated way, which is only going to become more of a complex mission, in Skellett’s view.
“Outsourcing was once as simple as joining the dots. Now we’ve got a lot more dots on the page and how we join those up has a massive impact on the organisation and the people,” he says.
“If you’re simply thinking, ‘I’ve got a problem keeping my lights on’ and looking for a service provider to help you do that, you’ve got another problem.
“Why not think about the design of your team differently – because you need to move the money you spent keeping the lights on to support the growth and change inside the organisation.”
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