Dealing with layoff jitters

Honesty, preparation, and training are the best ways to deal with employee dislocation

The topic of layoffs comes up eventually in almost any discussion of BPO (business process outsourcing). Letting some IT staff go may be inevitable, depending on what exactly is being outsourced. So how can a company reap the benefits of BPO while taking care of its employees, avoiding low morale, and preventing staff from abandoning the company while they’re still needed?

It might surprise you that honesty is the best policy. “The minute you start talking about BPO, there will be discomfort in IT and fear of job losses,” says IDC’s Vipul Bhargava, author of “IT Eyewitness: Avoiding Staff Burnout,” a December 2005 IDC report. “CIOs and IT need to communicate early and clearly that this may happen. We’ve found that as long as they foster an environment of trust, there won’t be much of a problem.”

Gartner Research Director Robert Brown agrees. “You tend to have blowups in cases where management holds back with employees until the last minute. You need to keep them in the loop through all the milestones, exploration, and the signing of the deal, and then clearly lay out the transition over time so that employees know how long the runway is and whether they’ll be transferred, keep their jobs, or potentially be laid off.”

Bhargava also suggests that if a CIO knows there will be outsourcing in the next few years he or she should provide appropriate staff training to foster relevant skills for the job market. “If you’re running a legacy system and you have two programmers who don’t know anything else, send them out for training and development on whatever is relevant in the market. You’ll be able to remove some of that resentment.”

Such preparation can also prevent staff from leaving early, Bhargava adds. “I interviewed a company where the CIO had told the staff that they would lose jobs, but they were amazingly positive because he had taken care of them and made sure they had the right skill sets. They felt very loyal so they made sure all the processes were in place and the CIO was comfortable before they found jobs outside.”

Plus, a little monetary incentive always helps keep people on staff before the end game. “One of the best practices we hear about is keeping retention bonuses as part of the arrangement to make it worthwhile for the employee to stay,” Brown says. “Typically these are for one or two years.”

Ultimately, those laid off may well find a home with the BPO provider. Several of the consultancies we talked to, including Accenture, EDS, and IBM, frequently transfer process-related IT staff to their own payroll. “It’s always great to get people with intimate company knowledge and a good understanding of legacy systems,” says Sean Kenny, vice president of business transformation outsourcing at EDS. “Documentation for these systems is always spotty, and there’s nothing like tribal knowledge to get you going quickly.”