Playing with fire

When Henry Forde, the director of technology service provider, net:telecom, ditched one company and signed an agreement in July last year with another to provide maintenance services to his customers, he saw it as a good deal.

‘They were primarily an engineering company,’ reflects Forde. ‘They did a lot of installation. They were struggling with sales and they thought it would be a good fit. I thought it would be a good fit too.’

It wasn’t. Forde explains that as net:telecom started to bring in more sales and grow, the engineering company struggled to maintain the required level of service. ‘Although they valued the business we provided them, they couldn’t meet that demand as they didn’t have the resources and the capital,’ he says.

Other difficulties soon began to surface: ‘I suppose personalities came into this as well. The chap at this company was aged 50-plus, old school, not very flexible, and he had been in the industry a long time and saw margins move from 80 per cent to 30 per cent.’

It was the outsourcing company, says Forde, which suggested the contract should be suspended and they parted ways several months ago. The experience has given Forde some food for thought with regard to what went wrong. He believes that signing the contract per se is not the only issue to concentrate on. With the benefit of hindsight, he thinks it’s essential to factor in eventualities like whether the company to which you’re outsourcing can keep pace with your own company’s growth.

‘It’s about finding the company which is bigger than you are, but has the same ethos and is flexible enough to accommodate you. There’s no point hiring a global giant, as it won’t be able to give you the dedicated attention you need,’ he says. In addition to this, human nature and relationships need to be taken into consideration. ‘Contracts can be signed, but how do you arrange a get-out clause when personalities clash and things don’t work?’ he asks. There is no easy answer to the question. It encapsulates the risk a business takes when embarking on the outsourcing process. As for Forde, he was fortunate in that both net:telecom – which has four staff – and the engineering company were small enough to agree to disagree and amicably move on. (Incidentally, net:telecom is back with the company it initially replaced.)
This experience hasn’t dissuaded Forde from outsourcing. Far from it. He says the company would not have been able to grow like it has since starting up at the end of
2002 without other organisations assisting with its finance, telecoms and IT functions.

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