Edition No. 7

Making the Decision to Outsource

Benefits, pitfalls, and our own experience

There are many philosophical and economic reasons as to why outsourcing the Environmental, Health, and Safety (EHS) function in a company makes good business sense. But once a company has made the decision to outsource, some of the less obvious issues or questions become quickly apparent. This article focuses on several ideas that you may want to consider as you make the decision to outsource. We have also included a case study where we discuss our experience here at EORM when we decided to outsource our Information Technology (IT) function.

Why Outsource?

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Let’s consider several scenarios that illustrate why you would want to potentially outsource your EHS functions. First, the management team in a company may decide that their strategic objective is to focus on their business’ core competencies such as producing products or services. Therefore, it makes sense to outsource areas of business that are not considered core competencies to suppliers that specialize in providing that specific service. Examples include IT, EHS/risk management, security, or construction.

Or perhaps the company may be in an industry where there are just not many hazards, so there may not be enough work to keep a full-time EHS expert busy and motivated. The size of the company may be such that it cannot provide growth for an EHS individual through professional development or advancement.

Benefits of EHS Outsourcing

A primary benefit of outsourcing the EHS function is that typically, the company doesn’t have to worry about employee turnover, hiring candidates, or providing a path of professional development for the employee.

Economically, the reasons may be more obvious. The hiring of an outside contractor may produce the unbiased accountability a company needs in risk evaluation. The company may find that market conditions in its industry may cycle enough that EHS headcount is regularly affected. With an outside contractor, the company’s EHS staffing can be adjusted accordingly without affecting internal headcount. EHS help may only be needed on a project basis (for example: indoor air, ergonomics, or compliance) and a contractor can assign specialists to the company on an as needed basis. A multi-national company that does EHS globally may not require EHS personnel at each facility. Outsourcing can help alleviate this by contracting out the management and maintenance of a well-established EHS program. Or the company may want scalability in their EHS program so that it can be extended across multiple facilities without adding personnel at each site. An outsourcing firm provides accountability because clients can manage consultants to the expectations outlined in the contract.

Moving Forward – Things to Think About

Once the decision to outsource has been made, there are still a few personnel pitfalls to be aware of. Is the company culture such that an outsourced employee can succeed? Will the company allow access to the electronic tools in, for example, purchasing, document control, and Research and Development (R&D) that an EHS specialist will need to do the job successfully? If the role of the outsourced EHS function is to review and evaluate rules and compliance, will the management team support those findings if there is pushback from employees? Also, who at the site will manage the outsource contract? Balancing expectations between the client’s senior management team, the onsite manager, and the consultant is essential for successful outsourcing. This ensures that the client is getting the service contracted for from the consultant and, most importantly, that the consultant understands the client’s expectations.

If you are in the process of deciding to hire outsourcing help, remember EHS companies are good at managing projects, but make sure they have the bandwidth and strategic locations to adequately support your needs. Will the outsourcing company be a true and trusted partner with you? Will they give you the added benefit of building strength of skill in your company or do they have a mindset to just get the work done?

EORM’s Outsourcing Experience

As a part of our business, EORM delivers EHS outsourcing to many clients so we see how it benefits a company or organization. So much so that we decided to outsource our own IT function. Here’s a small part of what went into our decision-making process.

First, the problem: we discovered that our management team was devoting too much time to IT for what it contributed to our business. Also, our top people were becoming overly stressed trying to keep up with technology. And we knew that if we ever lost personnel within our IT department, especially our IT manager, we’d be in big trouble understanding how to hire a replacement. (We acknowledged we didn’t even know all the right questions to ask about the function.)

Finally, we determined that the IT function at EORM was not our core competency. How our IT department functioned rarely, if ever, affected our customers nor did it have a major impact on our product or service delivery. So we decided to outsource the function to Lanlogic, a California-based network consulting and IT management consultancy.

How it Helped Our Business

The transition was transparent. We interviewed different Lanlogic personnel and chose the people that we thought would best fit into our corporate culture. We currently have three full-time outsourced people at EORM headquarters supporting our IT function. This includes a director-level manager from Lanlogic. When we need additional people for special projects, we add them. When we don’t need them, they are assigned elsewhere by Lanlogic; this gives us total scalability. To keep the director-level manager informed, she is included in our semi-monthly operations planning meetings. This benefits us immensely because she keeps us informed about upcoming expenses, technology upgrades, and server downtime. All of these things have potential financial or operational impact on our business.

Outsourcing our IT function has also given us some insight into what our customers are experiencing as they outsource EHS from us. We have even incorporated into our career path at EORM a stint as an outsourced employee, just so we know exactly what our customers encounter.

If you’d like more information on outsourcing the EHS function, please click here.