Don't cut, innovate!

The Royal Bank of Canada (RBC) has been in the news lately because of a planned layoff of a number of its IT staff. The kicker is that, before they leave, they have to train their replacements and their replacements are supposedly "temporary foreign workers" who will eventually leave Canada and go back to their country of origin (I'm not being coy; I want to keep this post a bit more general than what's been reported in the media). This, of course, has caused an uproar.

I teach a course on E-Business/Managing e-Commerce at McGill University and one of the topics we discuss in class is outsourcing and its relative advantages/disadvantages, costs/savings, etc. I've worked for an outsourcer before. I also advocate it under the right circumstances. Maybe there is a part of your operations that is not core to your business. An example of this might be server management, or some other aspect of your business for which you have no expertise such as security, or a new regulatory requirement that can be addressed by a highly specialized firm.

So, why am I on this soapbox? Because this is going to eventually become an issue for organisations who are taking or will take advantage of cloud computing and their service providers. At some point, a CIO, CFO, or VP of Finance will realise that there are cost savings associated with cloud computing and decide, "Well, we don't need an IT department of [insert number of IT staff here] people anymore, let's cut [insert number of employees to lay off here]."

This is, without a doubt, a knee jerk reaction (albeit a difficult one according to those doing the cutting) and absolutely the wrong decision. Yes, some organisations justify the cuts based on the bottom line and revenue promises to futures markets, and sometimes this is justified, but it should not be the first choice by any stretch of the imagination.

Those employees, who know your core business, have been trained by you, and are more than likely competent individuals, should be retasked. That's right, not only should you find them comparable work, but give them a goal to help create value for your customers and your organisation; these individuals no doubt have some idea(s) how to improve some aspect of your business.

[Aside: Incidentally, RBC has backpedaled and announced publicly that they would offer comparable work to the individuals affected by this latest round of outsourcing.]

The US and Canada are suffering from a drain on jobs that are leaving for cheaper climes. How do we continue to maintain living standards when decent paying jobs are being cut? The answer is to promote innovation.

The 'O' word is greatly feared by employees. It is humiliating, upsetting, and demoralizing to be 'let go', or to be told that 'the business has decided to go in a different direction' and that 'your services are no longer required'. Before getting to that point, ask them: what can you do to help the organisation; do you have any ideas that can improve our business; are our processes as efficient as they can be; can you take on an innovative new project? I think you'd be surprised by the answer.

Don't cut, innovate!