Special Report On Outsourcing

Consider Your Options

By Adrienne Fox Mar 1, 2007
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HR Magazine, March 2007 You and your outsourcing vendor are at an impasse. It’s three years into a seven-year contract, and you just can’t see eye-to-eye on important issues. Customer service goals fall short, employees complain about misinformation, and the vendor is nowhere near meeting the cost savings promised or the efficiencies of scale expected.

Do you grit your teeth and wait out the next four years, hoping that things will change and that service-level agreements will be met eventually? Or, do you cut your losses?

Whether it’s due to poor vendor service, a merger or acquisition, or company growth that surpasses the vendor’s capability, you may be faced with a tough decision to sever ties with your current vendor.

You have two choices: Switch to a new vendor that can meet your needs and expectations, albeit risking another poor performance. Or, bring the function back in-house where you have more control but may be lacking in personnel and institutional knowledge about the capability you outsourced.

Both options are viable, but both carry risks. To help you weigh the benefits and costs of switching vendors and prepare to transition to a new one smoothly, start with Susan Ladika’s feature, “Throwing the Switch.” Then, consider what’s involved in bringing a function back in-house with Eric Krell’s article “Backing Up.” This two-part package starts off our Special Report on Outsourcing that also includes a timely piece on hitching investing advice to your 401(k) plan.

Adrienne Fox is managing editor for HR Magazine.

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