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This is a tough question to answer for most people since a lot of the negative attitude that surrounds outsourcing can be simplified into one thought; not invented here. Of course that thought carries with it a lot of other baggage such as the quality won’t be as good as ours, there are risks in being reliant on a third party company, there are risks in that a third party company won’t have the same priorities as we do, and it costs too much.

Some of these voiced concerns can certainly have merit. For me, it all boils down to how well you run your company. If you are a goal oriented company and measure your progress, improvements, accomplishments and failures, then hiring a consultant or outsourced organization should not be a problem for you. Lets take a business category like EDI and discuss some of the pitfalls that may exist here.

First, EDI is expensive. You need trained individuals, an experienced IT staff, customers/vendors that use EDI, an adherence to the existing standards and a lot of patience. All of these cost money and time. If you wanted to control some of these risks you could do some quality hiring, but experience tells me that for some of these jobs you might not find a qualified person for some time. So if you don’t, that means spending money on training, which is manageable, but also means you might not hit your calendar targets. Lets take a look at each of the above risks and see how a consultant/outsourced group might help.

Quality. The perception is that they won’t be as good as what we will demand in house. Of course you have to do your research on any consultant or outsourced group and check their references. But, assuming you have done that, a consultant or third party organization is specialized in EDI (in this example). That means they service several clients for a similar need. That also means that their other client industries may not even parallel to yours. These are all good things. This means knowledge. This means they understand how to get things done correctly. Finally the quality measure is what you set. How would you set it in your organization? There is no reason whatsoever that would prevent you from doing the same to an outsourced group.

Reliant on a Third Party. True, this does feel risky regardless of quality references and tons of experience. The feeling here is that you will not be able to operate without them and therefore held over the barrel on fees, services, etc. How you handle this is to have someone internally to be the main point of contact and learn all that you can so that they can almost do the job themselves. Management also needs to be intimately knowledgeable about the services they provide and learn from them over the years so that you have the ability to question and challenge them when necessary. Finally, they need your business too. If they get paid by transaction, what is 10% of zero? Have a budget, work in those costs, understand the industry standards and you will be fine.

Priorities. This goes back to the quality point above as well as the single point of contact within your organization. Have the right goals set up between your two organizations. Work with a company that feels like they are just another branch of your company and that they treat all your issues with equal importance. If they don’t, let them know what you expect during those tough situations. My suggestion is to do so BEFORE you need to so they are big boy/girl conversations and not emotional and reactionary to a specific situation. Lastly, if you don’t feel you are getting the prioritization then firing a consultant or third party is fully within your control.

It costs too much. It can if you don’t understand the costs of the service you need. This also brings me back to an earlier statement of how many people you would need to run an effective EDI solution within your office, the training you will need to support, the overhead in carrying those people and the risk of not even having the talent available in your local environment. The reality is that EDI consultants are going to save your company a tremendous amount of money because of the knowledge, time savings, and manageable budgeting. Some companies that offer EDI may even keep your servers at one central location and provide service to your machines as needed. This can save you a lot of time and trouble as well. Everything is kept up to date for you without even needing to call a computer tech to your office for general maintenance. This can also free up space for you and keep your office computers running better. Of course the same can be said about any consultancy or outsourced group.

What is the moral of this story? Consultants can offer you a tremendous amount of insight and services you might not be able to hire internally. Further if the information need is a short lived need which allows you to go into a good direction for your company, then you didn’t need to hire someone for that direction change. Do your research, check those references, and make sure you have clear, organized expectations and goals. Good luck.