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Outsource or Keep In-house? Workforce Planning Issues

By Joanne McCool

When an executive is deciding whether to outsource a project or business process, there are a number of factors that need to be considered: Will outsourcing save money? Will it save time? Will the organization see a higher quality outcome?

But many, if not most, of the critical questions around the decision to outsource emerge from a deeper issue: whether the organization has the right people and skills to meet not only current demands, but also to meet the demands of work that may arrive eighteen months down the road. 

Unfortunately, many organizations approach workforce management in a haphazard fashion. They hire people expected to be high performers, or they seek out those with skills relevant only to a specific point in time, and immediately immerse them in a project or projects.

Unfortunately, many organizations approach workforce management in a haphazard fashion.

This traditional approach does not account for either the rapid pace of business change—especially given the rate of technological innovation—or the need for certain organizations to adhere to mandatory compliance initiatives. This type of workforce management is reactive rather than proactive, though it does often produce short-term success.

However, as new projects are considered, new skill sets are needed to staff them. And organizations that take the traditional approach to workforce management are left scrambling to find the right people with the right skills at the right time. The all-too-common result is that the organization is forced to turn down a lucrative contract or, perhaps worse, bites off more than it can chew, causing quality to decline precipitously across the board.

The alternative to constantly hiring just for the needs of the moment is to outsource those projects or business processes that require skills or resources that the organization cannot or will not be able to muster. But most organizations lack visibility into their future project pipeline, much less what skills and resources they will need to meet the demands of those projects.

For project management consultants, implementing a strategic workforce management solution is the key to making their services attractive to those organizations which have made the decision to outsource.  This means adopting a Project Portfolio Management (PPM) approach to workforce management, which requires that consultants better understand and anticipate the needs of their clients, then identify those skills and positions essential to meeting those needs. This approach places the best employees in the most strategic positions and good performers in support positions so that those with crucial skill sets are in the right positions at the proper time.

Good Project Portfolio Management solutions provide consultants with a systematic approach to understanding when it makes sense for an organization to outsource a project or business initiative.

A PPM solution can provide a clear view of all aspects of a consultant’s demand pipeline, and the best solutions allow the consulting manager to break down demand by job type, positions, role, or job title.  Once the manager has a clear picture of demand, he or she can then define the skills and levels of expertise needed for the entire workforce, with each person clearly delineated within the system by their skill sets and level of expertise. 

Another feature of a good PPM solution is the ability to provide utilization or capacity analysis against both current and future demand. This capability enables consulting managers to quickly determine whether they have the right number of top level and supporting positions and resources, and allows them to identify surpluses and gaps between the two.

Identifying demand trends that lead to the correct skill assignments is crucial, and the right PPM solutions provide features which can identify emerging business patterns such as an influx of business in a new industry, increased demand for new skill sets, trends that indicate where to profitably initiate a new practice, and shifting patterns and values in forecasts. 

With these solutions, consultants can efficiently allocate personnel to hundreds of simultaneous projects and ensure that they meet current client demands while anticipating future needs.  Executives can answer and plan for hypothetical scenarios, determining what would result, for instance, if they augmented their workforce in anticipation of taking on a new account or project.  PPM solutions for workforce planning provide managers the ability to view outcomes of hypothetical scenarios instantaneously, helping them save time and increasing their visibility into project commitments and budget goals. 

Good PPM solutions provide consultants with a systematic approach to understanding when it makes sense for an organization to outsource a project or business initiative.  Once the consultancy understands the work its customers currently have in the pipeline, the work they are likely to take on in the future, the resources and skills this work will require, and how they are currently using the resources they have, consulting managers and executives can make informed decisions about the types of things likely to be offloaded—and they will be well prepared to take on these new projects.

Without this insight, the decision to outsource is not far from a shot in the dark.

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Joanne McCool is the General Manager of Primavera Evolve, a global provider of solutions that help companies improve the management of people, projects and process. McCool has more than twenty years of experience, including organizational design and development, human resources, sales, and general management. Find out more at www.primavera.com/industry/cs.