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Change Management in Outsourcing

written by: Amanda Dcosta • edited by: Marlene Gundlach • updated: 2/4/2011

Building a strong, cohesive and enduring relationship between the client organization and the outsourcing agency is possible only if a well-conceived change management policy is put in place.

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    Change Control Plan Change management during outsourcing has been a worrisome subject and the apprehension of many industries to outsource work is due to the fact that more than 50% of all outsourcing contracts have run into rough patches. Research has revealed that one of the chief causes for this large incidence of failure is the inability of the company managers and staff to properly interact with the outsourced vendor.

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    Change Management Outsourcing Policy

    It is now being acknowledged that one of the key factors for success of outsourcing lies in introducing effective change management policy within the client organizations. Organizations that failed to manage the change associated with outsourcing relationships have suffered a great deal. Quite a bit of productive time has been spent attempting to make the employees develop rapport with the outsourced agencies.

    Active application of change management is being advocated as the most important tool for accomplishing the necessary procedural change that is part of outsourcing. It is a fact that outsourcing initiatives must be accompanied by a well thought out change management program early on, to help employees overcome fears and the natural resistance to change.

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    Change Management Collaborative Offshore Environment

    The next question is what effective change management is necessary during outsourcing to ensure the client administration machinery is not derailed. At a minimum, an effective change management program must include a fail-proof communications strategy for each key stakeholder groups in the organization, including the managers and staff. It is true that many client organizations pay scant attention to acclimating people on both sides to the changed circumstances when hiring outsourcing teams.

    To instil confidence in the minds of all employees, an appropriate redeployment and retention of employment plans must be in place. All staff members must be made to feel secure and that outsourcing must not affect the existing roles and responsibilities of each of the employees. There should possibly be a training program to help employees, managers, and others in the retained organization understand how to work with the outsourced agency.

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    Change Management Factors During Outsourcing

    In short, a change management program during outsourcing will require proven leadership skills, a plan to safeguard stakeholders’ interests, transparent procedures, broad-based communication strategy, and step-by-step change-over guidelines. Refusal to invest in change management programs during the outsourcing phase may lead to avoidable investments later or the entire outsourcing plan could end in a fiasco.

    It is good to start planning for change management well ahead of outsourcing the assignments, as it requires sufficient time for establishing the relationship between the client and the outside contractors, and adjusting to two different work ethics.

    The change management program, for it to be effective and successful, has to be a collaborative effort between the client and the outsourcing agency. Although most change management program components are the responsibility of the client organization, the outsourcing agencies must also be fully aware of how outsourcing initially affects the client organization and work to ensure the program takes off and runs without any hitches.

    Resistance to change is indeed part of natural human nature. Outsourcing is becoming almost inescapable for many different organizations and has to be accepted as today's business reality. Therefore, an effective change management policy must be evolved and put in place for outsourcing methods to succeed.