Outsourcing and Jobs

by Greg Hutchins

Jim (name changed) had been looking for a quality director or manager position with a pharmaceutical company in the Northwest. We'd met at one of my Value Added Auditing workshops, where he'd been upgrading his risk management skills. He came up to me with his story.

He'd been laid off nine months before and couldn't find a quality job in his industry or even in closely allied industries, although he was willing to take a lesser position as a quality engineer. Why couldn't this smart quality person, who was willing to take a pay cut, find a job? This is the tale of a new business model and outsourcing.

Thousands of quality professionals find themselves in a similar position during this most brutal recession. The Dow is up. Corporate executive compensation is up. Corporate fraud is up. But, jobs are down. More than 2.8 million manufacturing jobs have been lost over the last three years. Part of this total includes quality jobs in manufacturing.

It's said knowledge is power. So listen up. Bad things could happen to you.

Let's look at some of the reasons this may be our first jobless recovery and, most importantly, what you can do about it.

New Business Model

In the last few years, companies have had to buttress their bottom lines. Processes were engineered, but that wasn't enough. Shareholders and senior management wanted a breakthrough approach--developing a new business model and outsourcing noncore work.

The new business model goes something like this:

  • Managing the brand. A company's core brand is its business differentiator: the promise of known and high product quality and the ability to sell the product at a price premium.
  • Designing products. A company's core value lies in its intellectual property, which is its ability to design differentiated products and deliver knockout services.
  • Outsourcing noncore products and services. All or most noncore and nonvalue added activities are outsourced. First, it was commodity products, then low-tech ones. Now back office processes are being outsourced. In some cases quality services are being outsourced because they are not considered core or don't support the core.
  • Conducting assembly and testing. Assembly and testing are often considered core because these activities provide regulatory and litigation assurance.
  • Selling products. Sales is core because without it, there is no revenue.

The original equipment manufacturers (OEMs) have been outsourcing up to 85% of their manufacturing dollars. The outsourcing phenomenon has had major impact on quality professionals. It was stunning and scary to count the number of quality professionals at an ASQ section meeting I attended recently who were looking for work.

What Can You Do About Outsourcing?

There's a strong parallel between a company's business model and your personal work and career model:

Managing the brand. You are a brand as a service provider or worker. Your reputation of getting things done is what defines your effectiveness in your company or as a consultant. Brand equity and value also translate directly into promotability and higher consulting fees.

Designing products. You are a product with value adding features, performance and solutions. As a mobile intellectual property, you can design your brand and enhance your value adding features. It's pretty simple. The higher your real and perceived value, the higher your remuneration.

Outsourcing noncore products and services. You want to be core to a company or at least support a company's core. If you don't, your job is outsourceable. Is quality core in your company? Is your quality job core to your quality organization? The solution? Understand what's happening in your industry. If your industry is declining or work is being outsourced, then there's a good chance your job is in jeopardy.

Conducting assembly and testing. The purpose of these activities in an OEM is to provide assurance or peace of mind to the organization. You can and should do the same with your boss, your boss's boss and right up the ladder. This is sometimes called managing your boss or networking. You may be the best and most value added employee or contractor, but if your higher-ups don't know of your value contribution, then you and your project will be on the outsourced list.

Selling products. You should always be selling, promoting and positioning yourself. If you don't, who will?

Final Thoughts

Shameless self-promotion and branding may be hard for quality professionals. Many of us were taught and reinforced with the idea that being modest is appropriate behavior. This attitude is a career stopper if you're a consultant or today's quality professional.

Look around and ask why someone became a quality vice president or is now billing out $250 or more an hour as a consultant. She or he didn't do it from being self-effacing. Self-promotion is a must-do activity in this new economy.

Defining your personal core capabilities, value differentiators and value adds is difficult. Many of us had our abilities defined by what we did as quality engineers or managers. In other words, we were our job title. This is now too limiting. If you can't define your core capabilities and value differentiators and value adds, then your boss can't either and there's a greater chance your job is up for outsourcing.

GREG HUTCHINS is the engineering principal of Lean SCM LLC, a supply, risk and project management company based in Portland, OR, and www.valueaddedauditing.com. He is also the founder of www.workingit.com, a work and career management website. Hutchins is a member of ASQ.

When a company outsources their supporting processes they have more time to strengthen their core business process.
--Mark Antony, 07-13-2017

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