How important are the Human Resources teams in an IT outsourcing project?

Along the last 20 years, as an IT outsourcing contract manager, I have lived, under both perspectives (buyer’s and seller’s), the impact over the human resources involved in an IT outsourcing project.

Such experience allows me to attest the importance of the role of HR departments of both the buyer and seller, mainly along the negotiation and transition phases of the contract. Their joint managerial action is a determinant factor to the project success, aiming at minimizing the effects that result from the intrinsic and unavoidable reaction observed among the affected employees.

The table below shows the 6 typical stages of the emotional behavior of the affected employees, as well as the managerial attitude that should be jointly adopted by both HR areas.

This approach will significantly minimize the degree of demotivation and stress that always exist in this scenario and that may negatively impact the planned benefits of the project.

One of the obvious risks to be confronted is the eventual loss to the market of human resources understood as critical for the project success, as a consequence of the inability to keep them motivated through the right motivational factors.

Such critical resources should be attracted to relevant functions such as, for instance:

– a contract governance manager in the buyer organization, aiming at assuring the effectiveness of the contract operations

– a technology strategist in the buyer organization to assure full alignment between the business priorities and new implementations under the outsourcing contract

– a top resource on the seller’s team, as a consequence of the accumulated culture about  the buyer’s business operations

The interaction between both HR departments will enable an adequate individual evaluation of the affected employees, which will be categorized as:

• Invited to be transferred to the seller organization
• Retained on the buyer organization
• Stimulated to retirement
• Incentivised to voluntary resignation
• Fired

Naturally the category discussed above should desirably be eliminated: the one of the critical resources lost to the market.

Each affected employee will have to decide if he/she accepts or not the category proposed by the employer and, if not accepted, seek another alternative in the marketplace.

Among the issues of concern of the employees invited to be transferred to the provider, which will subsidize each individual decision, we can name:

• HR transition plan
• Work hours and physical work placement and infrastructure
• Salary, vacations, extra-hours and periodical evaluation policies
• Fringe benefits
• Buyer and/or seller responsibility in case of future judicial allegations
• Period of time with job assured after contract signing
• Professional development perspective in terms of:
  • Career
  • Training / Education
  • Job promotions

Conceptually, concerning a professional development perspective, the transfer of an IT employee from a company for which IT is not part of its core business to a company for which IT is the core business tends to represent a significant advancement. Obviously, such perspective may be confirmed or not, depending on how the transferred employee performs on the seller’s organization.

Additionally, it should be emphasized the importance of the joint action of both HR departments, as each of them has a relevant role in the process:

• Seller’s HR department: it has a solid experience of countless previous contracts and may perform an important consultative role along the negotiation and transition processes.
• Buyer’s RH department: it has a deep knowledge about the professional profile of the IT team to be outsourced and, as such, it can make the better decisions concerning the categorization process described above, assuring an effective alignment with the business objectives intended for the project.

Do you agree with the concepts presented above? Enrich the discussion with your comments.