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Why Extended Staffing Beats Outsourcing Every Time

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By Dean Meyer

Responsibility for selecting contractors, negotiating contracts with them, managing them and judging their work is assigned to the people best qualified to do so -- those in the same profession.

With extended staffing, commitments to clients are made by staff, not by vendors. This insulates clients from the distinction between internal and external resources. They need not worry about who is chosen to do their projects, or about enforcing or renegotiating vendor contracts. Clients can hold staff accountable, whether vendors are involved or not.

At a broader level, clients don't have to worry about managing the firm's relationships with vendors. Staff establishes partnerships with suppliers and resolves any problems in the relationships.

Another advantage of extended staffing is that all vendors and contractors automatically live within the rules and business processes of the firm. It also allows the internal staff to ensure architectural compliance and quality. And clients don't have to worry about providing detailed technical direction outside their area of expertise.

By bringing contractors into the organization through the appropriate internal group, staff can also ensure that existing knowledge and solutions are reused rather than reinvented.

Another value staff adds by remaining in the loop is the management of their "businesses within the business." They generate entrepreneurial ideas for extending their products and services so as to deliver more value to the company, without thinking about whether or not these new ventures are profitable to a vendor or within the vendor's business strategy.

Extended staffing strengthens internal service providers rather than eroding their capabilities. Competition within the function is avoided. Of course, clients have the right to go elsewhere if an internal service provider isnít satisfactory. However, staff will work though one another rather than contract directly with a vendor for services outside their personal domain, reducing competition (and enhancing teamwork) within the function itself. Some may argue that competition is healthy; but there are far less expensive and risky ways than outsourcing to keep internal entrepreneurs "honest," such as benchmarking and performance management.

In fact, extended staffing keeps internal entrepreneurs in touch with their competition, market prices and external quality standards. If they find that "buy" consistently beats the "make" alternative, staff have the benchmarks they need to motivate internal improvements.

Furthermore, new skills and technologies can be transferred to internal staff in the process of working with contractors. This reduces the risk of expensive dependencies on vendors and gives clients a point of contact for ongoing support after the project is completed and the contractors are gone.

Just as important as the economics are the motivational impacts. The extended-staffing strategy sends the clear signal that the company is willing to invest in its people. This is motivational for everybody throughout the company. Outsourcing, on the other hand, has the opposite effect. It creates an environment of dead-end careers, broken loyalties and fear.

Clearly, vendors fulfill some needs, and staff people fulfill others. In making decisions about outsourcing, the challenge is to set up ongoing processes within organizations that bring in the right vendors and contractors whenever -- and only when -- they add value. In addition, ongoing processes are required to ensure that vendors are properly managed to protect the interests of your shareholders.

Extended staffing does just that. Through the concept of extended staffing, clients get the best of both the internal staff and outsourcing.

Useful Links:

NDMA
http://www.ndma.com

Choosing Your Staffing Model
http://www.sourcingmag.com/home/home.aspx?i=02_12/1/2005_cn_854_5

Putting Extended Staffing to Work
http://www.sourcingmag.com/home/home.aspx?i=02_11/21/2005_cn_823_5

4 Dimensions To Managing Your Service Provider
http://www.sourcingmag.com/home/home.aspx?i=02_11/7/2005_cn_792_5

4 Advantages to Outsourcing
http://www.sourcingmag.com/Home/home.aspx?i=02_10/19/2005_cn_748_5_00_00

How Executives Paralyze the Effectiveness of Their IT Teams
http://www.sourcingmag.com/home/home.aspx?i=02_10/3/2005_cn_735_5

Wresting Control of Priorities from Your Internal IT Team
http://www.sourcingmag.com/home/home.aspx?i=02_9/22/2005_cn_691_5_00_00

Why Your IT Team Needs a Full-time Internal Consultant
http://www.sourcingmag.com/home/home.aspx?i=02_9/6/2005_cn_661_5

How To Get Your IT Staff to Give You Service Like Your Service Provider
http://www.sourcingmag.com/home/home.aspx?i=02_8/22/2005_cn_640_5

5 Reasons Management Considers Outsourcing (And Why Those Reasons May Be Shortsighted)
http://www.sourcingmag.com/home/home.aspx?i=02_8/8/2005_cn_604_5_00_00


About the Author:

N. Dean Meyer has made organizational health his life's work. He has been teaching, writing, and consulting since 1968. He founded NDMA Inc. in 1982 to focus exclusively on organizational transformations. Contact Dean Meyer at dean (at) ndma.com or visit http://www.ndma.com.

 
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