Just Don’t Step On My Blue Suede Shoes

 

Politicians and other demagogues have given the business act of outsourcing a bad name, due, at least in part, to the infernal human tendency to overlay some sort of moral judgement on economic transactions that almost always do not involve the person making the judgement. If the person who, say, processes the company payroll is herself an employee, then that is somehow seen as more righteous than if she works for a company that performs the payroll processing service for many companies, particularly and especially if the payroll processing service is headquartered in a different nation. In the case of the latter, some ignoramuses will even assert that such a decision – to outsource the payroll function – is tantamount to an act of treachery, and those cats will step on your face, slander your name all over the place.

But anybody with a room-temperature IQ who gives this even a quick analysis will realize that such assertions are absurd. I’m not a master of internet communications and attractor of PM minds and advertising revenue: I’m just a blogger. In a sense, I have “outsourced” those functions to ProjectManagement.com. Pea farmers have no idea what type of package their delivered crops will use upon their delivery to the market – they’re more concerned with creating and maintaining the best environment for growing peas. If they were to attempt to control all aspects of growing, processing, packaging, transporting, and selling their peas, you can safely bet that the cost of those peas will be significantly higher than the farmers who concentrate on growing their crops, and outsource all of those other functions to those who specialize in them.

No, the judge of which functions should or should not be outsourced is not fear-mongering politicians or hopelessly misguided economics columnists (e.g., Paul Krugman). The proper judge is thoroughly committed to the advancement of people’s well-being, but is known for having a harsh side: the judge is success or failure in the free marketplace. If outsourcing a particular function is a good idea, then the outsourcing company is better positioned to deliver its goods or services at a lower price, or to deliver a superior good or service at the same price, or some of each. Consumers benefit. If the contemplated outsourcing is a bad idea, then the company doing so will be in a poorer position to benefit its customers, and will tend to be eliminated from the particular market. Whether or not the outsourced ability is performed overseas, or by an organization others believe to be unpalatable is truly irrelevant, economically. It really is that simple.

That having been said, is there an exception to which functions can or ought to be outsourced? Yes, there is, and that function is, ironically, Project Management.

Think about it: all of the aspects of asset management can be (and commonly are) outsourced. The aforementioned payroll, plus accounts receivable and accounts payable, are easily performed by specialists in their own, separate organization. Even taxes have been outsourced for generations. In the strategic management realm, companies have outsourced this capability since 1841, when the first advertising agency opened its doors. Of course, advertising is not the complete strategic management function – which is to acquire more market share than your competitors – but it’s pretty darn close.

This leaves only Project Management from among the three management types that cannot be outsourced. Why not? Because Project Management is all about delivering specific scope on the customers’ parameters of schedule and cost, meaning that any attempt to transfer this capability would be to introduce an unnecessary third party in-between the company and its customers. Those companies that deal successfully with their customers do so due (in part) to the directness of the relationship. Now, project controls – the function of collecting data and processing it into usable information for PMs – can be outsourced, since this is an information delivery service, not the actual PM-making-decisions process.

So, in the realm of outsourcing, you can do anything but lay off of my blue suede shoes. Put another way, it’s rather interesting (is it not?) that you can outsource virtually any function that an outside organization may be able to do better or cheaper, but you can’t outsource Project Management.

And don’t even think about drinking my liquor from an old fruit jar.