When a company makes the decision to outsource its IT services requirements to a new provider, one of the biggest concerns is people. How can you re-badge without making experienced staff feel they are not valuable? It’s all about your service transition plan, says Eric Slaghuis.
When companies outsource, they choose what is believed to be the most suitable bidder in the market. The reality is that this bidder comprises a collection of people brought together by a particular company culture and a collection of business processes. That chain of individuals is only as strong as its weakest link.
During the contract term, the service provider dedicates selected employees to deliver on the scope of work. In many cases, the service delivery staff are considered part of the value proposition.
In cases where a contract is terminated and the services are awarded to a new service provider, the service delivery staff have to move with the services.
Suddenly, they find themselves working for a new organisation, through no choice of their own It’s a practice commonly referred to as re-badging.
There are some key advantages to rebadging existing employees from an incumbent provider. It ensured ongoing employment for the delivery staff, minimal disruption in service delivery to your customers, maintenance of knowledge and minimal training costs, no change in customer satisfaction ratings during the transition, and no interruption to the achievement of contractually obligated metrics.
However, the staff now have to work for an organisation, not of their choosing, and one that is seen as a competitor by their current employer. They may even have to work at this competitor or, even worse, might have been previously employed by them. Additionally, they may find themselves inconvenienced by having to travel to new offices.
For the legacy service provider, it is not necessarily the best arrangement either. In a labour market where skilled and experienced staff are scarce, losing key personnel is a problem. In some cases, star performers are moved off the account just before contract termination and replaced with junior employees as part of a so-called staff development exercise.
Moving people from the client to the outsourcer can unsettle the people, and cause them to underperform.
The biggest loser in such a transaction may well be the new service provider. They are seeking to impress their new customer, but they have to drive a seamless service transition project while dealing with new staff who do not understand the company culture or its processes, and who may be reluctant or unsure about being in a new environment. It ‘s an unenviable position for the new company. The contract was won based on the merit of how services were delivered before the new staff arrived. Transitioning your way of work onto the new client, with new staff members, is like being dealt a double blow.
An IT service can be fixed. An underperforming person is much more difficult to correct.
Handle with care
This a transaction should be handled with great care. An IT service can be fixed. A broken employee becomes a liability. However, if employees perceive this move as an opportunity, and they are of the opinion that their interests are being taken care of, the service transition can be successful. This can only be achieved through a well-planned and carefully executed human change management process.
As a customer, when you are contemplating a service transition, engage early. A seamless transition is the end goal. Communication is crucial throughout the entire process. Be sure to anticipate and proactively address as many questions and concerns as possible.
Key points to consider
- Determine if a staff transition would be triggered by such a move and get the right team to assist and advise you.
- Identify the key staff on the account. Determine how important they really are. Perhaps the service is common enough in your market that an alternative team could do a similar job.
- Consider the potential new service provider’s experience and success in previous staff transitions and make it one of the vendor selection criteria. Remember, the affected staff will once again deliver services to you, even though they may have been unsettled.
In the value-adding chain, it’s the people who are most affected by the outsourcing decision. Protect the value by protecting the people.
Importantly, we are all in the business of adding shareholder value – the company buying the services, the company losing an outsource contract, the company gaining a new customer, and the people who make it all happen. It’s the latter who will most be affected by the change, which is why they need to be protected and understood. We are all links in the chain of the economy; let’s not break one of them.
Have you been affected by a re-badging transaction? Tell us how you were affected, and whether you experienced it as positive, beneficial move, or not. By sharing some first-hand experience, we can all learn what to look out for when we face the next re-badging transaction.
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