Internal resistance can doom offshore projects

Disgruntled insiders may block outsourcing; care needed when choosing project leaders

January 26, 2004 (Computerworld)

NEW YORK -- The most serious threat to companies' efforts to send work offshore isn't coming from angry protesters and politicians. It's coming from managers who are intent on torpedoing their companies' offshore projects, executives in charge of such projects said last week.
Disgruntled managers, worried about shifts in responsibilities or the loss of their jobs or the jobs of co-workers, can easily thwart offshore projects, the executives said.
Opposition can take many forms. Individuals may block meetings with vendors and consultants, raise numerous points of opposition throughout the process in an effort to frustrate it, or even take more nefarious actions such as sabotaging code developed offshore, the executives explained.
Rick Pfeiffer, former head of Asia-Pacific IT and operations at General Electric Co., one of the first U.S. companies to move work offshore, said that 60% of offshore project failures can be attributed to "someone directly tied to it [who] has seen to it that it falls off the rails."
Internal opposition is "one of the top reasons why projects don't go through," echoed Cliff Justice, managing director at NeoIT.com Inc., a San Ramon, Calif.-based offshore consultancy.
Advice for dealing with internal resistance, offered at a Strategic Research Institute LP conference here last week, includes ensuring strong support from upper management, picking the right people to head the effort and getting managers involved early in the process.
"Choose the business unit manager who is going to be most enthusiastic, and basically have a manager who won't sabotage the process," said Amrita Joshi, a vice president who has managed business process outsourcing projects at IndyMac Bank in Pasadena, Calif.
"If anyone ... wants to blackball the project, it's going to be blackballed. So you have to build consensus," said Paul Fielding, a vice president who heads outsourcing efforts at J.P. Morgan Chase & Co. in New York.
No one is saying that getting internal support is easy. Offshoring of white- and blue-collar jobs to low-wage countries is an emotionally and politically charged topic. Opponents, including laid-off IT workers, have succeeded in getting bills introduced in Congress that would set restrictions on visas for foreign workers.

Outside the hotel where the conference was held, a group of about 30 protesters braved the cold to hold "Buy American" signs. Conference attendees were advised to remove their name tags when leaving the building, but the protesters, including John Bauman, a longtime IT worker at a Connecticut utility who said he lost his job because of cutbacks unrelated to offshoring, were peaceful. Bauman, who has been out of work for 15 months, said he hasn't found work because many employers in the state are moving jobs overseas.
"Offshoring will probably never stop," said Bauman, who serves as president of The Organization for the Rights of American Workers Inc. in Meriden, Conn. "Whenever a company can find a way to save money, they'll do it."
Bauman and other protesters said they're hoping that political lobbying and economic pressure, such as refusing to give their business to companies that outsource offshore, will become effective deterrents.
Potential Consequences
The political and social ramifications of offshoring are in fact making some firms disinclined to move work out of the country, some conference attendees said. Quantifying that is difficult, however.
Pfeiffer, who is now CEO of Ambertek Group, a Darien, Conn.-based consulting company, said offshoring is here to stay. "Despite the political rhetoric ... this is going to continue to move forward," he said, adding that managers have to come to grips with changing responsibilities. "You have to think of your job as a global job."
Offshore work doesn't always lead to reductions in a U.S. company's workforce. That has been the experience of J.P. Morgan Chase, according to Fielding. He said the company has recently seen a net increase in IT jobs, but in areas such as architecture design and development, which require higher levels of expertise than the development work it sends offshore. "It's a definite growth" in IT positions overall, he said.
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