Sunday, June 06, 2010

Outsourcing: Make sure to consider the CONs as well as the PROs

A couple of weeks ago, NPR ran a story entitled "Everyone Else Outsources, So Why Can't the Arts?" Since that time, the story has stuck with me. One positive result of the global economic crisis is that it has forced mature organizations to rigorously examine business practices, many of which haven't changed since the publication of Danny Newman's Subscribe Now! I am consistently amazed at the number of organizations that choose to remain stagnant because change is scarier than doing nothing and watching failure creep up to the doorstep. I applaud organizations that are taking steps to inform the field, as successes and failures will provide beneficial data we can use to plan our next steps. And while I have been accused on many occasions of being too aggressive with implementing change, in this case, I am reminded of a saying that a wise professor in graduate school would always say to me--"just because it is new, doesn't mean it is better."

Let me begin by saying that I support the outsourcing of activities that involve highly specialized tasks. Even in large organizations, most of us are generalists with maybe an area or two of specialized training. In unusual circumstances, many times we need to draw upon an expert with a lot of experience in a certain area. As we approach the opening of the Mead Center for American Theater, I am working with several outside companies that we are outsourcing very specific tasks to including Boneau/Bryan-Brown, SpotCo, Target Resource Group, SD&A, Mires+Ball, Shugoll Research and Allied Live.

Although we outsource work to some of the best companies in the business, we wouldn't be successful unless we supervised their work closely. The best outcomes are usually a result of forming very tight partnerships between on site institutional managers and specialists at the outsourcing firms. One without the other usually ends with mediocre work. In fact, I can't remember a single instance in my career where I hired an outside firm and it removed as much work from my desk as I had hoped for.

In addition, as Russell Willis Taylor asks in the article, one must consider the opportunity cost of outsourcing, particularly in areas of customer service and development. For those of us lucky enough to have been TicketMaster clients in our careers, we know how hard it is to get outsourced sales agents on message and equipped to provide excellent service to our customers (I even tried delivering baked goods weekly to call centers). How can an outsourced entity be as passionate as you are about your institution, and isn't that passion crucial in developing fundraising activities? And we don't like to admit it, but in some cases, we are in competition with one another. In purchasing ads, setting up promotions, pitching stories to the press, calling in favors, taking advantage of remnant space--when you are working with 10-20 arts organizations in the same town, who gets priority when undoubtedly there will be times when the interests of these organizations conflict with each other?

I am eager to see how this experiment in Columbus pans out. To me, this model creates many more questions than it provides solutions, however I think they should be commended for taking an innovative step that I am sure will inform the field in the future.

Just a sidenote--I wonder what BP thinks of outsourcing its drilling rigs at the moment?


Barry said...

Chad, it is surprising that many arts groups haven't looked at some of these options yet. Many arts and non-arts associations have.

CAPA is actually very similar to those organizations that we know as association management companies. The largest of which in the DC area is Smith Bucklin

They handle management of smaller associations that can't afford staff on their own. And of course, they capitalize on economies of scale when they are managing 10 or 20 groups at once.

I think CAPA will be successful because they are Columbus and understand the community.

ASAE has lots of materials on outsourcing ( for non profits..when, why, why not. As you have suggested, outsourcing can be great if done for the right reasons. But outsourcing seems to work best when it allows the organization to focus on the things it does well in fulfilling its mission.

Abe said...

Hi Chad,

I just want to share my thought. Companies are just being practical that's why they avail outsourced call center services or contract virtual call centres because they can save cost. Instead of hiring more applicants and spend for training, a well trained agent from the outsourced company will be the one to market the product and assist the customers. There are other reasons, as well.. Since the market is very competitive today, sales is easier to increase using new technology and with the help of the CSRs from an outsource company. That's why small to medium scale businesses trust outsourced companies. If a business is progressing and needs more manpower, it can still utilize outsourcing.

dancilhoney said...

Hi, Many telemarketing outsourcing firms are good if you provide them the list, script, and offer and then supervise the implementation thoroughly.