I didn’t participate myself in my first encounter with outsourcing. I left the company 2 years before it actually happened. But I had lots of friends still in the company and I assisted in the handover process. It was ‘my’ old company Atlas Copco Data AB that was outsourced to the company Ericson. AC Data at that time 1987 managed the computer operations of Atlas Copco. The reason for outsourcing the operations were mainly size not efficiency, Atlas Copco’s operations were streamlined and slimmed down to a minimum, the operation were automated, the personal staff highly professional.
This was one of the first large outsourcing deal in Sweden and there were a shortage of skilled IBM mainframe technicians. AC Data could negotiate from a strong position, the CEO actually let the employees participate in negotiations and one of the conditions were all interested should have a new job at the outsourcing company (Ericson) equal or better than he/she had at AC Data. During this time I happened to meet the CEO and he said ‘I never seen people so motivated to lay themselves off’. Very few were happy about the transition to Ericson, but that was more a fact that they all knew each other since many years and now they were split up in a new huge organization. This was probably as happy an outsourcing can be for the employees.
The next encounter with outsourcing hit me more direct I was working for a big computer service bureau; Esselte Datacenter. The owner negotiated the conditions without any of us employees were involved at all. My (still) good friend the CEO resigned and in came a consultant CEO. He was probably a good guy, but his mission was clear. ‘Do the transition to as fast as possible, only those the outsourcing company wants will be offered a job’. Of about 120 employees we were a handful that got offers in the end and we all thankfully accepted , 1992 Sweden had hit a severe recession and jobs were not to be found. Yes I was very thankful for the offer. At the time I was CTO and become very involved in the handover. I knew that I was important for the continuous operation. In the middle of the transfer I handed in my resignation. This was a calculated risk I had no other job, but as I expected I was offered a nice bonus if I promised to stay a year, later I understood I could easily have doubled that bonus, but anyway it was a nice bonus. (I demanded the same bonus for a colleague, which to my surprise was granted.)
The strategy for this outsourcing was very different from AC Data. The new CEO promised openness, we were all going to get all information about all aspects of the outsourcing deal, but in reality we only got information on ‘as needed base’ and as late as possible. I had the impression we were deliberately stressed so we should not have the time to think but just do our work. Vague talk about job offers but no promises from the consultant CEO. I had one guy that was desperate, he had just bought a house with a hefty mortgage, three small kids and an unemployed wife. This guy I actually could help. I ‘promoted’ him to part time assembler programmer and made him responsible for a credit information system and persuaded the outsourcing company he was vital for the system, they bought it and he was given a job. To my grief I could not help more than one, there were many good guys there and there were a lot of tragedies. One guy told me he was considering take up smuggling (stolen?) cars between Spain and Morocco but that is another story. This outsourcing was not happy for anyone of us employees, not even those of us who had a new job to go to, I stayed just over a year at the outsourcing company. From this outsourcing I learned leave do not stay one minute more than needed when you are at the risk being outsourced. Even if you can gain some dough by staying it is not worth it.
Some years ago as an IT-manager of the company I’m working for, I had to outsource/lay off some of my staff, due to an anticipated financial crisis. They were not many but that is no consolation for those afflicted. And it is not a pleasant task for the manager to lay off anyone, and these were good guys. I used my experience from the previous encounters with outsourcing.
The first thing I did, on a Monday morning ( always tell bad news beginning of the week, NEVER EVER on a Friday ), was to tell the afflicted guys as straight as I could what was going to happen. I told them they were going to get laid off, this was inevitable, the chance they had was to impress the outsourcing company, since we not in a position to demand the outsourcing company to employ them. The reaction was not what I had anticipated. They just did not believe me! They thought they were more or less irreplaceable. This was of course a mistake from their side, no employee is irreplaceable. Do not ever for a second believe you as an employee is irreplaceable, you are replaceable and expendable .
Next thing I did was to select an outsourcing company. I made a list of the candidate outsourcing companies the best at the top of the list. I draw a line between those I thought I could work with and those (below the line) I didn’t thought I could work with and told my boss to pick a company above the line. He chose the second from the top, and we are still doing business with them.
My staff found jobs outside the company. They did what I should have done myself, but I tried to arrange for them to go to the outsourcer, but they were not interested.
Outsourcing and laying people off are sometimes necessary, it is your task as manager to do this as smooth and painless as possible for all. This is probably the most stressful task you will encounter as a manager, and you should not do this alone, you should not only engage the HR department but the whole management team if possible.
Never lie, never give false hope and never promise anything you cannot hold. Be frank, open and tell your staff as early as possible what is going to happen. These are the best advice I can give you, I pray you never have to use them.