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Do you think outsourcing finally hurts employee morale?

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  • Do you think outsourcing finally hurts employee morale?

    In a survey conducted by Information Week regarding outsourcing of IT jobs, 61% of IT professionals were of the opinion that it does cause low employee morale and 70% are of the view that it does reduce IT jobs. Whenever there is news of outsourcing especially in IT sector it is not welcomed by IT professionals wholeheartedly as they know finally it is going to cost their future growth. But now they start accepting it as inevitable being a part of globalization.

    Do you think outsourcing actually impact workplace morale? Was there any outsourcing event happened in your firm and how did the management handle it?

  • #2
    Re: Do you think outsourcing finally hurts employee morale?

    IT is one critical area in what concerns outsourcing, as it's one of the first to go away if the company needs to focus on the core business. So no surprise comes from those numbers, but if it is a large company I think it's in their best interest to have their own team, as the response time is faster and there is a deeper knowledge of the different situations.

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    • #3
      Re: Do you think outsourcing finally hurts employee morale?

      When it comes to outsourcing, a lot is going to depend on why the company decided to outsource in the first place as to whether or not it will affect the employees morale or not. If the decision was made to outsource simply because the team at the moment couldn't cope with the amount of work, then it could actually improve morale as it would take a lot of the pressure off so I think we have to be careful in saying outsourcing is always a bad thing.

      If the managers and owners of the business are honest and open with the decisions they make, then even if the employees don't like it they will accept it. It's when a company all of a sudden shuts down a department without explaining their decision and outsources the work, that's when there's going to be problems, and while they don't HAVE to explain their decisions, but by doing so it will at least make the employees aware and feel like they are an important part of the decision making.

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      • #4
        Re: Do you think outsourcing finally hurts employee morale?

        Outsourcing can hurt your morale as an employee since you may perceive that you are not doing enough. The motive was positive but people are different and they respond differently. However, some companies may outsource and go further to betray the employees. My Dad lost his job when we were young due to this system. He never managed to get another job because other companies didn't understand why he left the first company in the first place.

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        • #5
          Re: Do you think outsourcing finally hurts employee morale?

          I think that it certain can, but it just depends on the service being outsourced and what exactly that means for the employees at the local firm. I am sure that in some cases it might actually be a boost, but again it just depends.

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          • #6
            Re: Do you think outsourcing finally hurts employee morale?

            I am torn in this issue. When I was GM of a software house, I used to hire outsourced programmers on a per project basis. We pay almost double the earnings of a regular programmer but that frees our company from overhead expenses like employee benefits. As per my interviews with the outsourced, they prefer to be free lance because their objective is to learn the technology (of different companies that would hire them). Some others said that they could not pass the requirements of big companies (like not having a college degree). With that, I guess outsoucing has 2 faces – one negative and one positive for the employee.

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            • #7
              Re: Do you think outsourcing finally hurts employee morale?

              In some cases, the workers who are fired have to train the employees they are losing their jobs too. That is very humilating. It's sort of like making people dig their own grave like you see on the gangster movie Casino. I wonder of some fired workers have refused to train their replacements.

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              • #8
                Re: Do you think outsourcing finally hurts employee morale?

                I think depending on how it is handled, it can be devastating to employee morale. The empty desks and the loss of office social life if your remaining employees are left dotted round the office is an unfortunate reminder that their jobs may be under threat, and there can quickly be a perception that "if the company is not loyal to me, why should I be loyal to them?"

                How it is not done? At a company I worked for, they announced the first round of outsourcing, let the people go and then told everyone else their jobs were absolutely safe. Three months later there was another round, and again they told everyone their jobs were absolutely safe, ignoring the doubting looks at empty desks. Then there was a third round...The problem was that the third round was meant to be the last, but by that point no one trusted management and the specialists they weren't planning to outsource all left for competitors anyway. The company no longer exists.

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                • #9
                  Re: Do you think outsourcing finally hurts employee morale?

                  Originally posted by Jason76 View Post
                  In some cases, the workers who are fired have to train the employees they are losing their jobs too. That is very humilating. It's sort of like making people dig their own grave like you see on the gangster movie Casino. I wonder of some fired workers have refused to train their replacements.
                  I am not really sure what you are saying here. So they get fired, and they need to train the people who will succeed them? Well, this doesn't seem fair or wise from the side of the company because they can train them poorly as a revenge. I would not advise this solution.

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                  • #10
                    Re: Do you think outsourcing finally hurts employee morale?

                    Originally posted by pwarbi View Post
                    When it comes to outsourcing, a lot is going to depend on why the company decided to outsource in the first place as to whether or not it will affect the employees morale or not. If the decision was made to outsource simply because the team at the moment couldn't cope with the amount of work, then it could actually improve morale as it would take a lot of the pressure off so I think we have to be careful in saying outsourcing is always a bad thing.

                    If the managers and owners of the business are honest and open with the decisions they make, then even if the employees don't like it they will accept it. It's when a company all of a sudden shuts down a department without explaining their decision and outsources the work, that's when there's going to be problems, and while they don't HAVE to explain their decisions, but by doing so it will at least make the employees aware and feel like they are an important part of the decision making.
                    I think whenever outsourcing happens in a company the major motive behind that will be to boost profit by reducing operational cost. This becomes more imperative in the current scenario of cut throat competition. Even market leaders are losing ground in the market due to stiff competition and the only option left for them is to reduce the cost. When it comes to cost reduction the first thing management will look into is manpower cut. In any company budget manpower cost allocation is the biggest one. So optimum utilization of manpower can immediately reduce the cost.

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                    • #11
                      Re: Do you think outsourcing finally hurts employee morale?

                      Originally posted by to7update View Post
                      I am not really sure what you are saying here. So they get fired, and they need to train the people who will succeed them? Well, this doesn't seem fair or wise from the side of the company because they can train them poorly as a revenge. I would not advise this solution.
                      The fired employee still needs the former employer for references. I guess that's why they agree to help train their replacements. Note, I have heard all sorts of stories of this thing happening. It's probably not unusual. Of course, if the former employee is cynical in dealing with his/her replacement, then that would be noticed and punished.

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                      • #12
                        Re: Do you think outsourcing finally hurts employee morale?

                        Originally posted by Jason76 View Post
                        The fired employee still needs the former employer for references. I guess that's why they agree to help train their replacements. Note, I have heard all sorts of stories of this thing happening. It's probably not unusual. Of course, if the former employee is cynical in dealing with his/her replacement, then that would be noticed and punished.
                        Totally agree with you. It actually happens in corporate world. As you rightly observed the employee who is going to lose job would be doing this only to get a good experience certificate and feedback from his present employer. But the company also has no other option when this employee is the only source of files and sensitive issues he may be dealing with. It is very important if the company is in service sector and as you know customer satisfaction is the prime focus in service sector.

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                        • #13
                          Re: Do you think outsourcing finally hurts employee morale?

                          Originally posted by optimistic View Post
                          In a survey conducted by Information Week regarding outsourcing of IT jobs, 61% of IT professionals were of the opinion that it does cause low employee morale and 70% are of the view that it does reduce IT jobs. Whenever there is news of outsourcing especially in IT sector it is not welcomed by IT professionals wholeheartedly as they know finally it is going to cost their future growth. But now they start accepting it as inevitable being a part of globalization.

                          Do you think outsourcing actually impact workplace morale? Was there any outsourcing event happened in your firm and how did the management handle it?
                          "Work Place Contraction" Problems and Solutions!

                          Hah, not easy to discuss, it all depends on whats happening and its happening across the board to all industries those in I.T are no exception.

                          Its getting harder to find sales or even a market, because the market was once a false positive and now contracting.

                          Of course it hurts employee morale especially when you have contributed to design ideas and creativity in projects that you have managed but belong to the business as IP Copy Right Laws are pushed upon you in the I.T industry where maybe you wrote the entire program but its not yours to take.

                          Although they did agree to terms of employment though that this might happen in the employment contract, its a standard clause I believe.

                          Question really is if Outsourcing is a good way to do things or not?





                          For me personally in Warehousing / Logistics outsourcing to 3PLs is a pet hate.

                          I rather expand with careful good planning but banks and financial cash to do so might be a problem.

                          The owner or board might not want to look into other avenues of say pulling in other investors to bolster the business direction in support of keeping things in house and expanding but for the sake of the greedy dollar an investor might make it worse depending on terms and conditions and proposals put forward, the sales/profit game to keep it short.

                          Outsourcing is selling out your employees that simple its not even in line with a good business vision or values.

                          Now there are exceptions where in some industries its better to do so maybe even for a time under a contract deal for start-up companies but thats not really a good way forward long term if you ask me.

                          I'm of the view if your in business then do it yourself and be the best at it find the right people in your business or train them up keep them happy dont over capitalize or over invest but be innovative, creative, know the market your in and be smarter at what you do as a business.

                          Or merge with a local competitor improving your market footprint with careful negotiations for expansion not reduction and good partnership.

                          There are some good companies that have done this and are doing well, because they cover more ground and share the same visions and industry knowledge only improving further their product and how they function.

                          Links:-


                          I support mergers that keep the employees and entitlements and concentrate on expanding and refinement through business solutions and good business principles.

                          Not just greedy profiteering!
                          sigpic

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                          • #14
                            Re: Do you think outsourcing finally hurts employee morale?

                            there will be resistance from existing employees

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                            • #15
                              Re: Do you think outsourcing finally hurts employee morale?

                              Outsourcing does hurt employee morale. Outsourcing commonly results in the need to reducing staffing levels. Unless it can be planned through attrition, layoffs are inevitable. This is difficult at best and if not managed appropriately, can have a negative impact on remaining employees. Finally, when researching vendors for outsourcing be sure to think through your specific needs and get at least three requests for proposals to ensure you are getting the best value for your money.

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