April 26, 2004


I have a few thoughts on outsourcing. I've seen it done on a small scale, and the biggest problem we had with it was the immediate loss of control of the work being shifted to others. I was working for a social/health club which had four public floors, three parking levels, and one floor of rental office space. One of the floors had a restaurant, and another had a lounge.

Our restaurant had done a steady business serving lunch and dinner (American staple food, nothing fancy), and our bar did a pretty good business. Then the owner got the idea that it should be concessionaired to a guy who ran a fancy French restaurant here. He changed the entire menu to French cuisine; the sales went from $100K/month to $60K/month; he got his 12% of the gross, and the club members were not happy. Since the contract was for a year at least, there was nothing the club could do about it. The concessionaire was getting paid no matter what happened to sales, so he had no real incentive (and no interest, professionally, it seemed) to go back to the style of food we'd been serving. The owner felt that the contract should run its course, and it did, but it took a long time to recover from that episode (if it ever has; I left the place after nine years and haven't seen the books since).

The same thing happened with maintenance. The owner decided that it would be cheaper to hire a professional building maintenance company to come in and keep the hallways, locker rooms, and public spaces clean. This sounded okay but turned out not to be. When some sort of cleaning emergency came up (spills somewhere, walls gouged and needing immediate paint, an accident in a bathroom) the cleaning team was either a) nowhere to be found or b) "not scheduled" to clean that area right now. There was this constant irritation that the place didn't look as good as it could and should, because the crews reported to their own bosses, not to anyone in-house.

I'm not trying to be Pollyanna here. The genie is out of the bottle, the horse has left the barn, the fat lady has sung. My story is anecdotal, and I know that it's a small sample, but I wonder how long it's going to take for some of these companies that send work offshore to have the same sort of aggravation.

Posted by Linkmeister at April 26, 2004 04:36 PM

Hospitals learned about "outsourcing" the hard way. Initially, they all thought they were saving money by outs'g things like the cafeteria concession, housekeeping, etc. Haha. Laughs were on them... Hospitals are now in the process of reining all those areas back in now cause it's cheap to have them inhouse and not outs'd.

Posted by: tina at April 28, 2004 05:48 AM