IT Workers – Let’s Get the Outsourcing Argument Right

Former IT workers at Molina healthcare have started a firestorm with a lawsuit (see Outsourced and Fired, IT Workers Fight Back).  The article is an interesting read and I side with the former IT workers . . . but not for the reasons that keep being used.  They claim discrimination and they may be right, I don’t know.  The court will have to sort this one out.

Regardless, discrimination or even the patriotic message of protecting American jobs will not resonate with corporate America.  Heartless . . . maybe.  But workers – and not just IT workers – need a new tactic.

Plainly said, almost all outsourcing I have seen in contact centers and IT is not profitable.  Yep, that is correct . . . it is NOT profitable.  This is a message that corporate America will understand.

Yes, I know the wages paid to foreigners is much lower.  However, reducing wages 30 – 50% or more isn’t enough to make up for the poorly designed IT when you separate developer and the work that IT is supposed to enable.

IT executives have made IT in the form of production plants in manufacturing.  I even hear words like “software factory” when I speak to executives.  Software is not manufacturing and to treat it as such is foolhardy.  This is economy of scale thinking and is used in an IT outsourcing strategy.

So what is wrong with the design?  The flow of the work – economies of flow.  Traditional software process: project planning, feasibility studies, systems analysis, requirements definition, implementation, integration, testing, installation, deployment and then maintenance.  There may be derivations of this, but who came up with this crap?  Why has this become best practice or the “one best way.”  IT projects have stunk up the place for a long time.  New thinking is needed to save jobs, profit and improve IT in general.

The traditional approach allows for the functional separation of work.  Project managers, business analysts, testers and other roles for the most part are non-value adding.  Most outsourcing seems to go after the developers, because they are expensive in an executive’s mind.  But developers are the only ones that do the work that adds value.  They have been hidden away as too expensive to interact with those workers that add value in the eyes of customers.

Developers are the only workers that can add value.  Having them away from the front-line employees that interact with customers is expensive.  Instead they have phone calls, meetings, requirements documents to facilitate their work.  Flow is disrupted and costs are increased . . . a lot!

Functional separation of work and economies of scale thinking leads to higher costs.  Outsourcing the pieces makes sense with this line of thinking.  This is why executives embrace it.  It is wrong thinking familiarize yourself with the arguments I have linked to in this article.  If you are in the midst of having outsourcing companies learn your system to get rid of your job, give me a call.  New thinking that is more profitable may be your only chance.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Read his articles at Quality Digest and his column for  Learn more about the 95 Method for service organizations.  Reach him on Twitter at LinkedIn at

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