Case study

Offshoring by Trading Company[1]

In 2008, a Toronto-based trading company with offices worldwide decided to offshore to India a significant part of its core back-office capability. Such was the scale of the project that some fifty managers were responsible for different parts of the functions that were to be offshored.

Although a small number of the managers had known about the plans for some time, most did not know until just days before the public announcement because it was a highly sensitive move that could—and indeed did—directly affect the share price. So the managing director informed the fifty managers simultaneously by conference call late on a Thursday evening. The call lasted an hour, but there were few questions as people struggled to absorb the information.

The managing director invited the managers to be involved in the delivery of the offshoring change programme, which had to be executed within three months of the date of the announcement. He said it would be a highly pressurized three months, dealing with both the technical complexities and with the people in the roles to be offshored, who would face redundancy-few were likely to transfer to India with the work. He invited the managers to attend a two-day retreat the following week, to 'explore openly what would be involved in being part of the change programme'. The managing director stressed that all would have a truly free choice about whether to participate and that if they were to choose not to do so, their decision would not affect their jobs because there was a need to keep other projects on track over this period. He was clear that the most important thing was for each manager to decide whether he or she was 'with the programme' or not. If the managers were 'with the programme', he or she would need to commit wholeheartedly, work through the process, and 'stay on message at all times'. The managing director wanted their answers by the end of the retreat.

All of the managers attended the retreat. The managing director opened the meeting with a short speech, passionately declaring his determination to succeed in this change. He said nothing about how the planned change would impact on the futures of the managers themselves, and for the rest of the morning no one asked. The HR manager then took over the process. Her focus was the exploration of the emotional aspects of dealing with change on this scale. She used a stage model of adaptation to organizational transition to talk through the emotional responses that the managers might face as they informed their own teams of the change. Then she drew 'the change curve' in masking tape on the floor and invited the group to stand on the curve-to express how they themselves felt about the change at that moment in time. All fifty positioned themselves somewhere in the second half-that is, in the process of acceptance and being ready to move on, despite still knowing nothing about the implications that the change would have for them. The managing director expressed delight and left the meeting, promising to return for its close the following day.

The group worked on in a subdued manner. Finally, after lunch, someone stood up and asked the managing director's deputy if he knew the impact that the change would have on their own job security. The deputy conceded that he did not know, but that the managing director had gone to join the board, which was considering the issue that very day. This unleashed a torrent of questions. The anxiety in the room was palpable as people started to voice reservations about the plan, and horror at their lack of involvement until now. The HR manager gave them space to talk and try to make sense of the implications of the change. As they closed the session for the evening, she invited them to stand again on the change curve on the floor-to express how they felt in light of the afternoon's discussions. All fifty positioned themselves at the early stages of the change curve-they were confused, angry and anxious, and wanted to negotiate some holding position with the managing director.

The following day, as the group worked on, the HR manager helped them to examine what had happened, and to explore what it had been like to be asked to respond without knowing the implications of the situation for themselves, why they had suppressed their real emotions, and how difficult it had been for them to work effectively in doing so. They began to plan their meetings with their own teams in light of this experience. When the managing director returned that evening, all but two of the fifty managers were ready to sign up; they were 'with the programme'.

Questions

1.  Which functions, in your opinion could be outsourced?

2.  What do you think may have been the explanation for the managing director's silence about the managers' future in the conference call and his initial speech at the retreat? How would you have handled this if you were managing director?

3.  Suggest possible HR implications of such a decision on offshoring.

4.  Develop an HR plan to address the issues. Analyse expected benefits of the project.

5.  Analyse risks embedded and strategies to mitigate them.