When I went to a Six Sigma event hosted by IQPC in Oct. 2005, I went around to each of the vendors at the tradeshow and introduced myself. Then I asked them how Six Sigma fit into outsourcing. Nobody could think up a fit, which amazed me. (Well, one company — a consulting firm — said that another group within their operation did outsourcing-related consulting, but the two divisions never really shared clients, work or knowledge.)
Mike Jude writes in CIO Insight on this very topic in his article, “Process Improvement v. Outsourcing.”
The way he sees the conflict is that organizations consider process improvement like Six Sigma long-term investments that need to focus inwardly for solutions; they tend to consider outsourcing as a quick path to cost reductions through looking externally for solutions.
Can they co-exist? Jude quotes Ed Baker, Alpine Business Technologies, an expert in combining the two: “…Outsourcing simply does not return the anticipated savings without some level of process characterization and improvement… People often look at outsourcing as quality- and process-neutral, yet hope for big savings. Our contention is that it rarely ends up neutral, but will end up more on either the good or bad side of the equation.”
Baker suggests a “judicious application” of outsourcing — mixed with improvement of internal processes “integrating with or supporting” the service provider. He points out that a side benefit to that approach is learning “the actual costs and quality outputs of the operation as a result of the process examination.” That’ll make you a more effective negotiator.
