Clive Trusson: How corporate senior management might invite major IT failures
Recent IT failures at British high street banks and telecoms companies have made big headlines because of the impact they have had on the companies’ fortunes and the public at large. From the messages that the companies give to the media, you might think that such failures are inevitable because of the complexity of the IT systems, and that they will learn any lessons to be learnt!
However, in an account just published in Work, Employment and Society journal, for which I have provided an introduction, an IT professional insider reveals that at one major British company senior managers are acting in a fashion that has the potential for leading to a calamitous IT system failure in the future. As the insider writes in the article, ‘I have a professional interest in managing risk, and all I can say is that the company’s appetite for risk is high’.
So what is it that the management are doing and why does it present a risk to the company?
Well, in common with corporate trends, the organizational management have shifted their outlook away from competing on product or service market terms, and towards competing on capital market terms. In other words, they have focused upon short-term shareholder value, and in doing so have honed in on labour costs for particular scrutiny as a controllable budget item. From there it has been a short step towards a decision to outsource the work performed by directly-employed IT professionals to an IT service provider offering to perform the work at less expense. In this case, the work has been outsourced to an Indian company who are providing their workers to do the work, some travelling to work on Tier 2 work visas to Britain, but most working remotely in India. The financial argument is that the company gains the benefit of what is known as labour cost arbitrage, i.e. the same work is being done whilst paying less for the ‘same’ labour asset. The managerial assumption here is clear: the workers are interchangeable.
However, and it is a BIG however, the workers are not the ‘same’ labour asset. The incoming employees of the Indian IT service provider, however well qualified they might be, inevitably lack the expertise of those they are replacing because they haven’t gained the contextual experience working under pressure with the IT system. Through this experience gained over the years of the system’s historical evolution, the IT professionals now being replaced will have collectively acquired what is known as professional inference, i.e. the capability to think and react rapidly in that obscure place between the identification of a major IT incident, its diagnosis and its resolution.
And so I have two questions for you to consider:
- Can we identify in an individual professional’s account of the outsourcing experience a management blind-spot that invites unnecessary corporate risk?
- If and when the IT system at this organization crashes big-time, and that necessary professional inference is not at hand to resolve the matter and get the system back up and running before it reaches the news headlines, will the managers who made the decision to outsource the work to a cheaper workforce own up to their mistake?
Personally, I suspect the answers to these questions are ‘Yes’ and ‘No’ respectively!
This Blog post was written by Dr Clive Trusson, Lecturer in Human Resource Management and Organisational Behaviour at the SBE. The article upon which this blog is based, “‘An end to the job as we know it’: How an IT professional has experienced the uncertainty of IT outsourcing” by Clive Trusson and Frankie Woods, can be found at http://wes.sagepub.com/content/early/2016/08/03/0950017016656320.abstract
Clive can be reached on C.R.Trusson@lboro.ac.uk