Reading an article in the Wall Street Journal called “Advice for Outsourcers: Think Bigger.”  This is basically a call for companies to do more outsourcing of not just the easy stuff, but to off-shore the more complex things too.  This article pretends that we actually do offshoring well on simple things and I found that nothing could be further from the truth.

The category of simple things are outlined in the article as “easy to learn  – things like software support and call-center operations.”  Rarely are either of these things easy and more importantly finding a company that actually does them well is like finding the another Hope Diamond.  A survey of customers would confirm this as fact.

So before we graduate to “bigger” offshoring let’s review the fact that in most cases we are outsourcing organizational waste.  The emphasis on reducing transaction (or visible) costs are blinding them to the total cost increase from this mentality.  Business cost reduction comes from improving flow, not focusing on costs.

The functional design and technology approaches are increasing these end-to-end costs.  The functional separation of work led to the poor design of most service organizations and is perpetuated by entrapping technology.  Organizations are missing one of the biggest opportunities for improvement . . . the design of the work.

So before running off to bigger and better outsourcing, let’s take a step back at our organizations.  Look at the waste being created in our end-to-end systems and rethink our approach.  A good place to start is in understanding failure demand (demand caused by a failure to do something or do something right for a customer).

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