Managing the Morale of Home Offices When Outsourcing

Managing the Morale of Home Offices When Outsourcing

Keeping up employee moral in the workplace should be a very high on your list of priorities. However, constantly keeping all of your employees happy through changing business situations can be difficult  at times. Since morale is more a state of mind and each employee is different, encapsulating and solving low morale requires a larger holistic approach of the organization.  The underlying causes are just too numerous, but can include job security issues, uncertain business conditions, limited upward mobility, a perceived unfair compensation, and outsourcing practices.  Inside an unstable environment, employees will focus more on career choices, a sense of personal well-being, and their financial future. So, today we focus on the instability that can permeate your business when management considers outsourcing and how we can best manage morale in the office.

Managing Morale During Outsourcing in a Profitable Company

In a simplistic example, you’re the manager of a company of 100 employees whose hiring rate is growing at 10 percent per year along with a 10 percent or higher turnover rate. However, you’re looking to outsource 20 mid-level administrators with a net savings of over $500K. Your investors are happy to hear this bottom dollar savings, but now your meeting resistance from the affected and even the surrounding employees. What should you do?

The answer here lies within the math and your actions.

In the above scenario, if your manpower is growing at 10% a year and the turn-over rate is 10%, then realising a 20 member out-sourcing exercise should have no long-term negative impact on employee morale.  A creative outsourcing plan will result in no layoffs, yet still achieve the bottom line to management. Your numbers may differentiate depending on your company’s growth and annual rate of turnover. But even more critical to this situation, is the underlying forces at work for employees when outsourcing becomes their reality in the office. Employees need to know that their company:

  • is not looking to squeeze every dollar of labour savings through outsourcing
  • is encouraging employees through actions versus words that they are not being outsourced, even if some of their duties do become outsourced
  • is creating opportunities to move existing solid employees to duties with greater responsibility

So how can an employer manage its work force through all the undulations?

Be Honest

Be honest, open, and upfront about everything you communicate to your employees. Sudden changes in business practices or protocols that impact employees create confusion, followed by a sense of anxiety in the work force. If employees feel any sense that management is hiding the truth, updated resumes start hitting the streets and unfortunately, a company loses its best employees fast.

Explain the Program

Educate employees about the outsourcing plan, the underlying reasons why, and exactly how their jobs are affected. Employees understand that businesses have to profit but also need to know how it affects them. If major changes are coming to certain jobs, then these must all be clarified as do any of the following concerns:

  • Major changes in business, such as converting to a paperless environment, affect the way “we used to business.”
  • Integrating with employees from another country and different cultures often forces employees to re-evaluate their own perspectives and prejudices.
  • Outsourced work is many times allocated in different ways from the past to separate the verbal language responsibilities from other functions of the office. Specifically, inform your employees that anyone who is able to take on higher responsibilities, has nothing to worry about.

Meet the Work Force

Meet your employees one-on-one. Ensure they understand where they stand jobwise with respect to the outsourcing program and explain the motivating reasons behind changes in responsibilities. Give reassurances when you can and for those career-oriented employees, outline a career path that can result in forward progress for the employee.

Motivate Your Employees

Promote and recognize those employees who can take on more responsibilities. Of course, outsourcing works best with growing and profitable companies that take the time to plan and implement gradually as well as keep employees in the loop.

Managing Morale during Outsourcing for a Start-Up Company

For profitable companies, this can be a very easy transition, but what happens when you’re not profitable yet?

Imagine if you’re a start-up service company with 100 employees and not growing. Your biggest client, which accounts for half of your business, gives you a 30-day notice to cut your prices by 30% or lose the business. The threat seems very credible, so after crunching your financial numbers, you realize to keep your client you must outsource at least 20 of your employees. So what happens now?

Unfortunately, there isn’t any escaping the reality, so to save the company, you must implement an outsourcing program that is going to cause a major disruption in your operation and create a major rift in employee morale. However, the steps are not that different from the profitable business with a notable difference: You must notify your employees immediately. After notifying them in a meeting setting, take the time to meet them individually.  Again you must:

  • Be honest and forthright.
  • Announce what’s happening and why to their specific case.

For employees in good standing let them know their termination date and if possible, offer a bonus on top of severance pay if they stay until the last day they are needed. Allow them time off for job interviews.

In these kinds of situations, implementation of your plan must be consistent with your words, although that may seem a futile practice if employers are in a full blown panic mode.


Outsourcing work for an underperforming company is many times more complicated than for a growing company. In these chaotic times, companies should continue to keep costs at a minimum and if possible outsource when the company is growing and profitable. It’s also important to note that having happy Australian employees and outsourced overseas employees are not mutually exclusive concepts. In fact, if planned correctly, everyone can gain from the experience allowing outsourcing to be quite complementary.

If you are looking at outsourcing some of your functions, consider partnering with a values-driven outsourcing service provider such as Yempo. We provide flexible offshoring solutions to assist clients who are new to outsourcing. Our exceptional staff benefits and professional offices ensure that your employees offshore are productive and happy. Contact us today to learn more about our services.