“In our most recent acquisition, we were able to deliver Day One connectivity for e-mail and other core services,” Shelman says. That in turn inspires confidence that the rest of the merger will go smoothly.
“On the cultural side, the challenge was figuring out whether employees were engaged or not,” Shelman says. “When they come to work, are they all rowing the boat in the same direction, or are they just showing up?”
After multiple mergers -- and some painful mistakes -- the company developed a multipronged approach to measuring employee engagement. Shelman’s IT group created its own communications department, set up an e-mail address where employees could post questions or air grievances anonymously, held town hall meetings, hired outside companies to survey employees, and brought in HR specialists.
Because Northrop Grumman is in a growth phase -- and has its own technology outsourcing division -- Shelman says IT employees who find that their positions have become redundant can usually transition to another part of the company. But with some disruptive changes, particularly outsourcing, head-count reduction is a key part of the equation.
“Contrary to popular belief, outsourcing is not slowing down,” says Paul Horowitz, national leader of PricewaterhouseCoopers’ outsourcing and offshoring practice. “We’re just seeing the tip of the iceberg.”
In some cases, outsourcing can free up IT pros to do more strategic, higher-level work. But the cost savings of offshoring are too compelling to ignore, says Dr. Michael Campo, CEO for Kitcoff-APSI, which administers retirement plans for numerous corporate clients. The company employs 23 people in Florida, and another eight in India via a contract with Patni Computer Systems. The overseas staff handles administrative tasks, basic IT maintenance, and database management, Campo says.
Outsourcing freed up Kitcoff-APSI’s highly skilled plan administrators to spend less time shuffling paper and more time talking to clients. But it also allowed the company to cut 10 jobs -- or about a third of its domestic workforce. Campo estimates the move will cut his expenses nearly in half.
“There’s no easy way to put a smiling face on this,” Campo notes. “If we go under, there’s no business, period. As a business owner, it’s the only decision to make.”
Managed poorly, however, outsourcing can prove disruptive in other ways. Too many companies buy into the “your mess for less” concept, taking a process that’s broken and simply tossing it over the wall to cheaper environments in India, China, or the Philippines, PwC’s Horowitz says. If they do it too fast, with unreasonable expectations and too little training, the results can be disastrous.
In one well-known example, Dell suffered a setback in 2003 when it had to bring some of its India-based call centers back onshore due to customer complaints.
“Training, acculturation, and HR on-boarding are critical,” Horowitz adds. “Success and failure around offshoring have more to do with people than anything else.”
Everyone remembers the horror stories: companies that force terminated employees to train their overseas replacements, holding their severance packages hostage; or those who deliberately cut more jobs than needed so they can hire “fresh blood” who aren’t embittered by the layoffs.