The real benefits of outsourcing come from enhanced specialisation allowing better focus on core tasks, not wholescale transfer of large multifunctional operations to a single group.
I agree with this, and in theory it's perfect. But in practice it too often fails.
When I lived in the UK I was an account manager for Rentokil Initial. We had a cleaning contract for ~170 Midlands Co-Op stores.
Rentokil had won the contract by promising an extremely high level of service with well trained cleaners and the latest equipment, at a reasonable price. Our bid was not the cheapest, but it wasn't excessive either.
I took on the role of account manager expecting to be supported by the huge resources of a well established multinational more than capable of delivering the contract at the promised level of service.
In reality:
* I was repeatedly told to ignore the terms of our contract because it had been mis-sold to the client and we had no hope of meeting it
* I learned that our profit margin on the contract was a mere 6% when it should have been at least 14%
* I was told we must reduce staff at as many sites as possible (up to 50% in some cases) for the sole purpose of increasing margin—even though this was a breach of our contract with the client
* I was told we must reduce hours at sites where it was not feasible to reduce staff (again, a breach of our contract with the client)
* I was required to hire people who had never worked as cleaners before; these employees never received adequate training at any point during their time with us, so their level of service was invariably poor
* District managers regularly hired new immigrants with poor or negligible English skills whose work visas had not been finalised
* I had to outsource specialised roles (e.g. window cleaning) to third party contractors because my own department didn't employ anyone for these roles
* Payment to these third party contracts was typically delayed due to budget restraints, so a number of them refused to do business with us again because they were sick of waiting more than 3 months for money that never arrived
* The process for repairing and/or replacing faulty equipment was unnecessarily complicated and usually took a minimum of two weeks, during which time the cleaner would be unable to do his/her job properly so the district manager often had to borrow equipment from another site (at one point we had a single buffer being passed back and forth between three different supermarkets)
* Equipment repair and replacement was outsourced to a third party contractor which was notoriously slow (probably because our accounts department rarely paid them on time)
* Cleaners were often paid incorrectly and corrections to their pay could take a month or more (a leading factor in our high staff turnover) some went to arbitration while others simply took it on the chin and walked out despite being owed hundreds of £s
* We paid minimum wage to everyone, even on the rare occasion when we managed to recruit a highly proficient cleaner with decades of experience
* I was told I'd be able to draw on staff and equipment resources from account managers on other contracts, but I typically found them unable to assist because they had staff and equipment shortages of their own; in fact some of them came to me begging for help I could not provide
And this is just the tip of the iceberg. I could go on and on.
