Second thoughts on outsourcing

May 24, 2000
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My first encounter with outsourcing goes back to the early 1980s. I had a job with a company whose business wasn’t going well. I knew there were economic problems, and I moved on, giving my job to an OSHA area supervisor who wanted some industry experience before becoming a consultant, his ultimate goal. I told him what the situation was, and that there was no guarantee how long he would have the job. Sure enough, about a year later the company eliminated his position. But everything worked out fine: My successor opened his consulting business, with his first client being the company who just let him go. Plus, he made more money out of the deal.

Around the same time, one of the largest employers in the area began to outsource site-specific safety and industrial hygiene work. I recall other rumors in the 1980s of companies planning to use consultants for safety and health.

All this sounds very familiar amidst the outsourcing boom of the 1990s. Now it’s common for safety and health, along with human resources, legal affairs, training, and other departments, to be farmed out. In this day and age it’s hard for any company to pass up the kinds of savings -20 to 40 percent- that outsourcing services claim to offer. Make no mistake, outsourcing is being driven by cost-savings. And the bottom line is any job or service can be outsourced.

The current boom

The impact of the trend is quite evident. Look at the growth in health and safety consulting jobs. When I started my career in industrial hygiene, about one in ten industrial hygienists called themselves a consultant. Today that number is about one in four. By the year 2000, it’s predicted that one in every three industrial hygienists will call themselves a consultant -if not a higher percentage.

This is mostly due to the migration of corporate-level industrial hygienists to the consulting ranks, following outsourcing practices. Left in most corporate towers will be one or two broadly trained and experienced professionals who will get work done through consultants and temporary help.

This is the way things are heading, but for myself, I try to limit the outsourcing I do. Instead of hiring consultants, in many cases I train employees to perform safety and health work with my guidance. Certain jobs, though, require certifications, like lead and asbestos abatement. Here it’s easier to go with consultants, though I’ve thought about getting our own people certified.

Certainly on the environmental side there is work, such as cleanup projects, that is outsourced.

One of the issues for me is control. I don’t want to lose it. There’s no need for unnecessary surveying, for example, especially if it makes employees nervous or suspicious. You have to be sensitive to this, and I’m not sure all consultants will be if they’re looking for business opportunities.

Some outsourcing critics are concerned about the attitudes of contract employees. They fear the work will get done with little initiative or enthusiasm. One critic described the situation this way: "A mercenary may shoot a gun the same as a soldier, but he will not create a revolution, build a new society, or die for the homeland."

There’s also the issue of cost. In some cases I think taking safety and health work outside can be more expensive than keeping it on the payroll. In fact, that one large company I mentioned that began outsourcing safety and health in the early ‘80s brought it back inside about three years ago. It got too costly, so the company created a position and hired the consultant it had been working with.

I remember one time in my career taking a look at the work I did for my employer and estimating the cost of my projects in terms of billable hours. It was cheaper to have me do the work in-house.

So I wouldn’t be surprised in the long run if many companies turn around and bring their outsourced work back inside. It might actually be cost-effective. And those few corporate generalists might find it difficult to monitor all the outside surveying and training, for instance. I can hear companies saying at some point, "We’re losing ownership of our programs."

But in the short-term I think we’ll see more outsourcing before companies pull back. So if you’re just starting out in your career, recognize that corporate jobs will be hard to come by. If you already occupy a corporate position, broaden your experience and skills. This is how to increase your value to employers.

Right now the picture looks promising for consultants. But stop and think about your prospects for making a long-term lucrative living off of clients. As outsourcing grows there will likely be a more balanced supply and demand of consultants. Competition will drive services to be either low-cost providers or niche specialists. Right now I have friends in consulting who tell me the field is crowded, and hourly rates aren’t what they used to be, even if you’re certified.

I don’t want to get carried away with career advice. I used to be much more sure of the future than I am now. Things change so quickly anymore. Which is another reason why it’s hard to envision outsourcing as a long-term, stable trend. But we’ll see what happens.

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