There are many issues with outsourcing, just as with any other method of delivering a service, but the issue of the people in the retained organization (those left behind to actually manage the new services) tends to receive very little attention before awarding a contract. Sure, you will have discussed how the parties will communicate, govern the agreement, escalation paths, roles and responsibilities, and hopefully have all of this documented within the contract. But ensuring that the people themselves are ready, tends to be an afterthought. 

There seems to be an assumption that if somebody previously managed internal services, they can also manage external services. Suppliers are then commonly blamed for service ‘dips’ as the parties need to find their way in the new relationship and management is told that the services need to ‘bed’ in.

In response to the issues that arise and the frustrations that the customer faces in trying to motivate their new ‘partner’ to perform the tasks that were previously done by colleague’s, new processes are developed, and consultants are brought in to examine what went wrong!

After seeing this happen numerous times, I appeal to everyone to put more thought into people before outsourcing, by:

1. Internally (within the customer) defining, developing and deploying a training program for the internal retained staff so that they are prepared to deal with the new relationship. E.g. What they are entitled to, what they can demand, how to demand it, what to expect, who is responsible, etc.
2. Potentially hiring externals who have been there before and got the t-shirt, even if only on an interim basis.
3. As part of the RFP/RFQ process, ensure that the method and timeline for process alignment (including tools, not just tools) is discussed, agreed and documented. Avoid vague definitions and ‘to be agreed during transition’ statements! If the processes are not re-aligned and available to people, everything stops, or even worse, continues without the necessary processes in place (an auditor’s dream).
4. Include some of those retained organization people in the RFP process. Let them meet the suppliers and hear first-hand what is going to be happening. It’s scaring how many service owners have never met their new partner before the contract is signed.
5. (To the suppliers) Stopping to pretend that your processes are stand-alone or will ‘easily’ interface with anything. Changing even the simplest process or report takes time and your customer will need information that is useful. Don’t restrict reports to KPI’s only and don’t flood customers with unnecessary information. People need time to change and holding up a contract of limitations is not making the partnership work.

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With some companies disillusioned by outsourcing, now re-insourcing or moving to a hybrid sourcing situation in combination with management choosing more Clandestine Outsourcing Decisions (Cloud) (I am impressed by the way that cloud providers have dodged the bullet on obligations that have been imposed on outsourcing suppliers in terms of not having to take over the people delivering the service amongst other obligations), everything just became even more difficult to manage for the retained organization. Even if still choosing for fully outsourced solutions, the addition of hybrid and multi-clouds will increase complexity of the IT landscape.

Not only do hybrid situations pose a new challenge for contract managers, but the incremental diversity of cloud means disparate reporting, tools and potentially less chance of having ‘one throat to choke’ when things go wrong. The chance that someone has developed in-house training materials on how to manage your service in this situation is going to be very slim. Since most public clouds also have restricted to no opportunity to perform interactive governance, there is even less attention to the people aspect that is needed to govern these new clouds.

At this point, most cloud providers will argue that their solution is self-contained or integrates with the best practice tools, conforming to ITIL (or other frameworks) processes. Some will offer that they also deliver cloud integration and the traditional suppliers will offer their services to integrate everything. All of which is great, but this doesn’t mean that the customer retained teams and their internal processes (which are often mandatory) are now aligned to deploying and using the latest technology and services.

Obviously, many cloud solutions are aimed directly at a customer’s business, circumventing internal IT service management organizations and as such, it becomes important to re-draw the line as to who takes responsibility for what. 

What’s the answer? From my perspective, with the increasing adoption of hybrid sourcing solutions, an organization should at minimum:

1. Develop a charter for the retained organization detailing qualifying criteria for when a cloud is to be managed by the retained IT organization or directly by the business
2. Prescribe the minimum obligatory tool integration and process interfaces to be in place before any cloud is taken into service
3. Publicize (internally) the risks and limitations of the new service. Usually, only the financial benefits and aspects such as flexibility are announced. This reduces pressure on the people.
4. Internally define, develop and deploy a training program for the internal retained staff (as with outsourcing) to understand the new complexities and opportunities of the service.
5. Develop framework agreements which can be used across multiple suppliers, ensuring that similar terms and conditions of service are applicable in a hybrid organization.

This of course, is simply my experience. I truly welcome feedback from others to further understand what people need. If you are responsible for services in such a changing environment, please respond saying what would help you.