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Feeding the FUD: Silent CIOs can sabotage outsourcing plans

How open are you about your outsourcing plans? If it's your "dirty little secret," you could be doing your department more harm than good.

Less than 2%.

That's the percentage of U.S. workers who lost their jobs to offshore outsourcing in the first quarter of 2004, according to the Department of Labor. That should comfort IT folks who have nightmares about a tidal wave sweeping away their livelihoods, right?

There was a sense of 'I've got to jump off the ship before it sinks.'
Ron Milan
Former LAN administrator
Wrong. According to Meta Group Inc., Stamford, Conn., morale in IT departments is at an all-time low, in part because workers are worried that their jobs will be jettisoned offshore.

"I've never seen it this bad," said Ron Milan, a former local area network administrator who has been looking for full-time work since December.

"If I had a Plan B, I'd execute it right now," he said.

The small percentage of jobs lost offshore, combined with the sunken morale hint that fear of offshoring, may be greater than the threat itself. And CIOs who keep their outsourcing plans under wraps not only add fuel to the fear, uncertainty and doubt (FUD), they also risk losing people they need to make those plans work.

The thud of FUD

Milan has felt the FUD firsthand. His LAN administrator position in New Jersey was sent offshore six months ago.

"They weren't totally up front with us about their outsourcing plans," he said. "But there was word of mouth. People aren't stupid; they catch on to things. They knew it was coming."

That's where the pernicious power of FUD began to creep through the cubicles.

"There was a sense of 'I've got to jump off the ship before it sinks,'" Milan said. That's exactly what a couple of his colleagues did.

And that's the price CIOs can pay for their silence.

"Some people in the company will be key in transferring work and establishing the relationship with the [outsourcing services] supplier," said David Foote, president and chief research officer of Foote Partners LLC, New Canaan, Conn. "If you don't protect those people, it could impact the work you're doing."

Foote has been studying offshoring and consulting companies on their sourcing strategies for more than a decade. He's amazed that so many firms do such a poor -- or nonexistent -- job of communicating their outsourcing plans within the company.

"It's remarkable to me that we still have to ask questions like: 'Do you have an internal communication strategy? Do you realize that people are afraid of this? Do you know what they may think when they see several Indian gentlemen in suits walk in the C-level offices?'"

Foote Partners offers its clients a checklist to ensure that they're internally ready for outsourcing and predict what issues might occur. The firms that handle offshoring the same way they handle layoffs are the ones that are going to run into trouble, Foote said.

Intel Corp. has cut staff but has done less outsourcing of employees' jobs, according to Doug Busch, vice president and CIO of the Santa Clara, Calif.-based chipmaker. Busch does not think there is a special technique for informing employees about outsourcing -- just plenty of honesty, advanced notice and good sense.

"The process of communication needs to be handled with precision, because small details of timing, sequence of message release and wording can produce dramatic differences in perception," Busch said in an e-mail to

He added that if CIOs are worried about losing critical employees or skills, they need to let the affected employees clearly know where their jobs stand.

"The process needs to have integrity, so that it can be reasonably transparent to the employees," Busch said.

Catch 22

It's not hard to understand why CIOs are reticent about their outsourcing plans. If they are totally open with employees, they risk a "service inefficiency," according to Gartner Inc. analyst Kevin Parikh, "because now you've got all these disgruntled and frustrated employees sitting around waiting for the hatchet or to be moved to an environment that's unknown." Parikh said that outsourcing traditionally has been "hush-hush" in nature. But he also thinks the current din of silence will subside, because CIOs just cannot risk losing their good people.

"The question here is … are we communicating properly with our employees to ensure that they're prepared for what's going to happen next? You want to assure your good people that they'll have a place in a new environment -- even an offshore one," Parikh said.

For more information

CIOs aren't the only ones being secretive about outsourcing.

David Foote has some advice on how to keep your best people.

Loss of key personnel made Meta's Top 10 Risks list.

Offshoring isn't just affecting morale; it's affecting paychecks too.

Got outsourcing plans? Take our survey.

Even so, outsourcing may be a real Catch-22 for CIOs -- damned if they're totally open about it and damned if they aren't. Those who follow Foote's and Parikh's advice could still make unwitting sacrifices to the FUD gods.

"Having done all that, it is still likely that some critical employees will decide to look elsewhere for career opportunities," said Intel's Busch. "Anytime employees feel that their jobs are insecure, some will look for a safer haven."

"It's a tough situation," said Milan. "I don't know if there is a specific solution. Some people are paranoid and can't be chilled out."

Still, if Milan had to choose, he'd rather know his fate than guess it. His message to CIOs: Be open about outsourcing plans.

"I've been at places where they don't tell you until the week before. I've been at other places where they were very open about it and gave us six months' notice. [It's better to] be open with your people and give them ample time to prepare.

"If a company has a more open-door policy where people are kept aware of progress, maybe fears wouldn't be so bad."

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