From the Editor: Uninformed Outsourcing

IT’S HAPPENED far too many times. An in-plant proves it is more cost effective than outside printers, yet one or two executives are still convinced the organization can save money by outsourcing. This misfortune befell one university in-plant manager in the U.K. not long ago. Though he collected benchmarking data proving his in-plant’s cost effectiveness compared with commercial shops, his executive board simply could not believe his figures (though they had none of their own). They were intent on outsourcing. Why? They had heard that outsourcing printing was the trend in higher-ed, and that outsourcing saves money.

How often have we heard this faulty logic being used by executives in a misguided quest to cut spending? Research overwhelmingly shows that most public sector entities lack the real cost data to make the decision to outsource, notes Ray Chambers, CEO of Chambers Management Group. And after they go ahead and do it anyway, he says, studies show that costs are not reduced and quality is not improved.

After all, he points out, eliminating the print shop doesn’t make printing expenses go away. Departments still have the same print budgets, only now, instead of depending on in-house print professionals to ensure the best price and quality, they’re forced to buy their own printing, with little to no expertise. They spend the same amount, he notes, but quality and price are likely to suffer.

Most outsourcing decisions, Chambers contends, at least in higher-ed, are rooted in bad management; administrators do a poor job evaluating the performance of their in-plants, they outsource, and then they boast about their savings. Others hear them, do a similarly sloppy job of evaluating their own in-plants, and then follow suit, without the data to make informed decisions.

This is the type of “research” that made its way over to the U.K. and forced the manager I mentioned earlier to endure 40 minutes of hostile grilling from his executive board. How did it turn out? Fortunately for him, he had accumulated a lot of knowledge about other university in-plants by networking with managers at conferences. He was able to come back with an impromptu answer for every challenge his inquisitors threw at him. He cited examples to refute all claims of outsourcing’s benefits and proved that, in fact, outsourcing is not the direction most higher-ed in-plants are going.

His persuasiveness bought him more time, during which he did another cost comparison with external providers, then hired a consultant to confirm his data. In the end, the board agreed to his 10-year investment plan and staff restructuring.

There will always be people who think outsourcing your in-plant will save money. It will always be your job to show them otherwise.

Bob Neubauer
bobneubauer@napco.com