But being reactive and supporting a client on an ad hoc basis flies in the face of what the outsourcing value proposition is all about; they are entirely incompatible. If a vendor continues to support each client the way they always have [been internally], they sacrifice their ability to achieve any sort of economies of scale and efficiencies across their client base that, in turn, allows them to deliver the value and lower prices that the client outsourced for. In the last one to two years, we've seen the market move towards greater standardization of services and process in large part because clients and vendors recognize that this is a problem that has got to be fixed.
CIO.com: You note that hero environments, while inefficient, often produce positive, collaborative working relationships between the client and vendor teams. Why is that?
Dreger: The camaraderie that defines the hero culture—client/vendor teams pulling all-nighters to solve a problem, senior staff stepping in to do the work of junior staff—creates a sense of teamwork and collaboration. But that positive team spirit prevents opportunities to improve.
Rather than pulling all-nighters, they should be finding ways to prevent problems that require people to work all night. And when you have senior people doing the work of junior people, you allow knowledge and skill gaps to grow, rather than closing them.
CIO.com: How costly is this to the outsourcing customer?
Mathers: The example of senior staff doing work of junior staff is perhaps the most basic. That results in lower productivity and higher costs. A related problem is duplicated effort. If everyone is pitching in to help one another, then it's not clear who has what roles and responsibilities, so utilization and productivity suffer.
Quantifying the cost impact of the hero culture specifically is difficult, but the cost impact of the related issues that culture drives — process inefficiency, duplicated effort, ambiguous roles and responsibilities—can add up to 10 to 20 percent of total costs.
CIO.com: How can IT outsourcing customers avoid this culture clash in the first place?
Mathers: Outsourcing works best when the internal organization has already been working with a process-driven model before the outsourcing happens. IT personnel and the business have already gone through the pains of moving from relying on heroes to relying on processes. The outsourcer may have even more rigorous processes, but at least the client has some appreciation for what it means to work within a standardized environment and what some of the benefits can be. If organizations don't do this, the move to an outsourced model will be painful, and the outsourcer will be seen as inflexible and difficult. Those perceptions can be corrosive to the relationship and take a long time to fix.
Sign up for CIO Asia eNewsletters.