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We contract for IT services from what we believe to be the most suitable bidder in the market.  However, the bidder is a group of people, that is brought together by a company culture and a collection of business processes.  I believe that people are the most important link in the business chain of processes, technologies, culture, and structures, needed to provide any service. But then

During the contract term a service provider dedicates employees to deliver on the agreed scope of work.  In many countries, the labour law then further states that service delivery staff are considered part of the provision of the services proposition[1]. In the case where a contract is terminated and the services awarded to another service provider, the service delivery staff have to move with the services.  The staff now work for a new organisation, through no choice of their own. This is commonly referred to as rebadging of employees.

Rebadging does protect the employment status for the delivery staff, which is commendable.  But, they now have to work for an organisation that they did not choose.  This new organisation is seen as a competitor by their recent employer.  This could be embarrassing as these individuals might have applied for work at this competitor or even worse might have left their employment in the past.  Having to work from a new office could also result in geographical inconvenience.

For the legacy service provider, it is not necessarily the best arrangement either.  They are losing potentially brilliant staff.  In a labour market where skilled and experienced staff are scarce, loosing key personnel is a problem.  I have often seen these star performers moved off the account just before contract termination, being replaced with junior employees, hidden behind a staff development exercise so that the legacy service provider can retain experienced staff.

I think the biggest loser in such a transaction might be the new service provider.  Wanting to impress their new customer, having to shine with a service transition project, and then dealing with new staff who do not understand the company culture or processes. These staff may be reluctant participants in the exercise. They are certainly unfamiliar with the new culture, now matter how familiar they are with the account  The new service provider has won the contract based on the merit their bid, which did not include new staff.  Implementing a different way of work for the new client, with new staff members used to the old way of work, is difficult.

I believe this transaction should be handled with great care and compassion.  An IT service can be fixed.  An unmotivated employee is a liability, not even taking into account the effect on the employee  If the employee believes that this could be an opportunity, and the employee knows that his interests are being considered, the transition may be successful.  This is achieved through a well-planned and better executed change management process.

As a customer, when you are contemplating a service transition, engage early.  Determine if a staff transition would be triggered by such a move and get the right team to assist and advise you. Identify the key service staff on the account. Consider carefully if this is really the case; are these really key staff?  Perhaps the service is common enough that an alternative team can do a similar job. Consider the potential new service provider’s experience and success in previous staff transitions and make it one of the vendor selection criteria. Remember, the affected staff will probably continue to deliver services to you. They may be unsettled, or even resentful over the forced change in their careers. I have seen a service transition materially disrupted by a disgruntled employee.

Each participant in the transaction wishes to add shareholder value.  The company buying services, the company losing an outsource contract, the company gaining a new customer, and the people that make it happen. But it is often the people that feel the change the most.  People are the important links in the chain of the economy.  Let’s not break  these link.

Have you been affected by an employee rebadging transaction?  Tell us how you were affected, and whether you experienced it as positive, beneficial move, or not. By sharing some first-hand experience, we can all learn what to look out for when we face the next rebadging transaction.

Author  – Barbi Goldblatt –  Regional Executive

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