Why Do Outsourcers Deliver Better Project Performance Than Inhouse Resources?

January 22, 2013 | Author: PM Hut | Filed under: Project Management Best Practices

Why Do Outsourcers Deliver Better Project Performance Than Inhouse Resources?
By Vaughan Merlyn

I was talking to a CIO last week about his desire to “tune” his IT Operating Model. I asked about the symptoms he was observing that he’d like to see eliminated through the Operating Model tuning. His answer was one I’d heard many times – but that did not lessen the passion that came across in the dialog:

When we have a project run by one of our outsource partners, it generally comes in on-time, within budget, and meets the specifications we requested. When we take on a project internally, none of those conditions are typically met! I’d like to see our internal resources as capable at delivery as the outsourced partners!”

The Secrets to Outsourcer Success

I’ve found that there are several reasons for the gap between outsourced and internal project performance – some obvious, others more subtle:

  1. Outsourcers live and die by their performance – it’s their business. They are paid for results. This leads to several typical characteristics:

    • Results are articulated very clearly – and are rigorously managed to.
    • People are held accountable for results. Failure to deliver has real consequences.

    • Scope – and the client – are carefully and skillfully managed. If the scope changes, so does the project schedule, cost and performance expectations.

    Compare these characteristics with those of the typical internal resource. Results are often vague and unstable. The old cartoon comes to mind of the project leader leaving a room of programmers, looking over her shoulder and saying, “I’ll go up and find out what they want – the rest of you start coding!” A caricature, of course, but one earned deservedly! People are generally not held accountable in any real sense. HR policies and fear of depressing morale and engagement render most managers impotent when it comes to accountability and consequences. And scope often changes frequently as business clients discover more about their real needs and constraints. Nothing inherently wrong with that, but schedule and cost should have been renegotiated but typically are not – unless there’s an outsourcer running the project!

  2. Outcourcers typically dedicate resources to a project – internal resources in an IT organization typically work on many projects are the same time. Even worse, they are often expected to simultaneously perform project work and service delivery work, which is often hard to predict and frequently requires an urgent response.

    The productivity and quality cost of this type of multi-tasking has been demonstrated time and time again. Ever since the Coding War Games, led by Tom DeMarco and Timothy Lister (see their wonderful book, “Peopleware: Productive Projects and Teams“) in the late 1970s, key factors that impact project productivity have been studied, illuminated and verified. There’s a plentiful supply of data about how long it takes a project team member to “re-engage” with his project, and the consequent productivity loss of this type of multitasking behavior.

  3. Outsourcers typically have projects managed by very seasoned Project Managers working to a consistently practiced and proven project methodology.

    Yes, I know this is supposedly the case with in-house resources, but from my experience, it often does not hold up in practice. Just about anyone can acquire the title “Project Manager“, whether or not they actually have the skills. Certifications such as PMP theoretically mitigate this, but I’ve seen PMP-qualified resources somehow forget everything they learned about project management once they get into the heat of battle – presumably due to the effects of 1. and 2. above.

What To Do to Improve Inside Project Performance?

There is no magic to this:

  • Articulate clear expected results.
  • Hold people accountable, and ensure that consequences are made real – both for excellent performers (e.g., promotion, recognition, added responsibility to train and coach others) and for poor performers (e.g., performance related intervention, demotion or reassignment, termination.)

  • Manage scope. This does not mean forcing the business client to live with a spec that may be unacceptable – but it does mean renegotiating cost and schedule when performance needs change.

  • Recognize that most project work is a full time role – dedicate project resources and isolate them from the day-to-day demands of service delivery.

So, why don’t these things happen? I don’t know – you tell me!

Vaughan Merlyn is a management consultant, researcher, and occasional author. His primary focus for the last 35 years or so has been and continues to be the use of information and information technology (IT) for business value creation. Vaughan is an Executive Vice President with nGenera. In that role, he participates in multi-company research projects, consult with Fortune 500 type companies, and provide Executive Education. His blog can be found at http://vaughanmerlyn.com/.

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1 person has left a comment

In-depth topic; nicely written. Outsourcing is often thought of a risk, but as you rightly state, these companies thrive on their ability to specialize and deliver that product to the parent company. In theory, you could say it was safer to invest in outsourcing…?

Tanja Handl wrote on January 22, 2013 - 10:00 am | Visit Link

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