A few weeks ago Debi (my very dear friend and dare I say ‘work mom’? 😇) and I were doing some brainstorming for IAOP (my dare i say ‘work community’? đŸ€”), and we got stuck on the oldest problem in our “industry”... what to call it?

The joke I grew up on in this business was that outsourcing is a four-letter word, never to be uttered outside the safety of the windowless conference rooms our clients banished us to. I always thought that was kind of a joke. But upon reflection I think people told that joke so many times over the last twenty years that it stopped being a joke and started being a mantra. We took the word out of just about everything we could. Job titles, certifications, conference tracks, association names, the slide that goes to the board. Nobody asks what the acronyms stand for anymore, which everyone treats as a win.

I think that's a mistake, and I want to make the buyer's case for why (the service provider’s don’t care
you can call it whatever you want, the more ambiguity the more they charge you!):

The reality is that purchasing (or ‘procurement’ as we have for some reason renamed it, who is making money off these name changes?!? And how do i get some??) - services, products, direct materials, the contractor sitting in your standup, your go-to-market ‘implementation partners’, the managed service buried inside a software license - all of that is outsourcing. We (America?) didn't stop doing it (we buy nearly 5x more of it from abroad than we did in 2005, the year a supple young Alex graduated high school and entered the real world), we stopped naming it. And you cannot manage, measure or defend a thing you have agreed not to say out loud.

Where I'm from, it was never a word. It was a thing that happened to people.

I'm from Detroit. The last memorable American manufacturing innovation was Henry Ford's assembly line - you're welcome, by the way - and I grew up with the consequences of what happened after the work left. My earliest memories are from our house on Edmore Drive near 8 mile and Gratiot, close to the Lutheran high school in Detroit my dad worked at. I remember learning how to ride a bike there, the book mobile that stopped on our block every week, and playing cops and robbers with my little brother behind the firewood lean-to in our backyard. And around age 4 I remember my parents telling me that we were moving to the suburbs to live with my grandma.

By the late 80’s we were already late to the ‘white flight’ party in Detroit, after the plants shut down the Big 3 moved their white collar jobs out to the suburbs. You’ve seen the abandoned neighborhood horror videos of Detroit on youtube, every one of those empty houses probably represented at least one family whose lives were upended when GM, Ford, or Chrysler outsourced their union job to Mexico or China.

Nobody in that story used the word outsourcing. They said the plants were closing. They said the work went overseas. They said the neighborhood was changing. The abstraction we argue about at procurement conferences showed up in my hometown as specific streets with specific houses on them, including the one with the firewood lean-to in the backyard.

So I understand exactly why the word is radioactive. I'm not interested in pretending it isn't. I’m also not interested in placating for some faceless bureaucrat or corporate executive trying to avoid a PR ding, especially if it makes my job harder.

First came the factories, then came the cubicles

Business leaders are currently trying to reverse forty years of outsourcing infrastructure and move manufacturing and assembly back to the US. Meanwhile the quieter wave, the one that ran through (and fueled) my entire career, went the other direction and almost nobody called it by its name.

In 2011 I came out of grad school woefully in debt, facing the worst recession in eighty years. Some of my friends with fancy law degrees were working construction jobs. I stumbled into the outsourcing business, and business was good. The first big wave of BPO was sweeping the nation, thousands of US GAAP-trained Filipino CPAs flooded the international job market, and we couldn't give them our most fundamental American careers fast enough.

The companies hit hardest after the financial crisis - insurance, banking - rushed to outsource all the back-office work they suddenly realized didn't need to be done by a high-paid American worker with the audacity to ask for healthcare and fifteen days of vacation a year. (Yes, that's satire in a business article. Deal with it.)

Here's the part that matters for the nomenclature (I’m trying to stay on point here I swear
cut me some slack I have debilitating ADHD and too much time on my hands on the 50% of my nights where my kids are at their mom’s house). Nobody picketed a shared services migration, there was no container ship. Services are harder to see crossing a border: when a company outsources software development, customer service, accounting, or stands up a team overseas, there's no customs declaration involved. You're paying for time, labor and expertise, usually digitally, often through a foreign subsidiary.

That invisibility is the whole reason the second wave was politically survivable. And it's exactly the reason the second wave was never governed as well as the first one.

Think about the hypocrisy for a second. We get loud about offshoring lower-paid, lower-"skilled" manufacturing jobs that will mostly be done by robots within ten years. We stay quiet about offshoring the high-paying jobs millions of Americans took on lifelong student debt to get. Whatever you think should be done about that, you can’t even have the argument if the activity doesn't have a name.

At Google I managed the f word, and it was a double f word there

I spent eight years at Google running vendor and outsourced business strategy for one of its big business units, including consumer customer support operations at a scale no other company has ever seen (IMHO). The majority of the labor being performed for Google (and Meta, and probably the rest of FAANG) was and still is performed by vendors. That is a plain operational fact, and we did everything humanly possible to avoid saying it that way.

It wasn't malicious. It was culture, employment law, brand risk and a dozen reasonable-sounding reasons stacked on top of each other. But the effect was real: the single largest input to the work was the thing with no clean internal vocabulary.

None of that was a strategy, at least not at the start. The tech industry moves fast enough that products get spun up out of nothing, and when something goes from an idea to millions of users inside a year, there is no version of events where you hire, train and manage all of those people yourself. Vendors weren't the clever option, they were the only option, it took me years to understand that. And then it scaled. The operation you stood up in ninety days because you had no other choice turns into ten thousand headcount, and at that point it isn't a stopgap, it's the business.

Google didn't have a central CPO until I'd already worked there for ~ three years. I used to read that as a gap, and it isn't. Plenty of large companies still don't have central procurement at all, and central procurement as it applies to services outsourcing is a genuinely new idea - there was no established practice sitting there to adopt. Big tech led the charge into outsourcing services because it was doing business no company had done before, in more countries and for more customers than probably every company that existed before it combined. The practice got invented on the way, which is a part of the reason why the vocabulary never settled.

The example I kept coming back to when I wrote my playbook for service providers was a vendor that took on one menial task nobody internally wanted to touch. Five years later they had more than ten thousand headcount on the workflow. They weren't a supplier at that point, they were a sovereign nation inside the corporate borders. They got there by selling relief, not labor - and because on our side, no single function owned the whole relationship well enough to notice what it had become.

That last part is the buyer's problem, and better sourcing does not fix it. It is what happens when the largest input to the work is the one thing nobody will say out loud.

What the renaming actually cost us

Here's the practical damage, and it's the reason I'm writing this instead of complaining about it.

There is one lifecycle - ‘the outsourcing lifecycle’. It runs from the first time anyone requests a third-party service to the day you pay them, and on through performance, renewal, change and exit. Call it Source (or procure - another bastardized name for the same damn thing that these mystery namers are getting paid for
) to pay if you want, the ‘official’ P2P process maps you’ll see plastered on the demo videos of the various unicorn procurement orchestration platforms are missing a huge part of the outsourcing lifecycle (like vendor management??). It encompasses all of us - buy side, provider side, advisers.

Because we stopped naming the lifecycle, we chopped it into silos that each got their own respectable, non-radioactive name:

Every one of those teams can do its job correctly and still leave the important decision sitting in the space between them. That ‘space between’ has been ignored for so long I risked my family’s financial future to build a business to fix it, what are you doing about it? When you have no shared word for the whole thing, you don't get a lifecycle - you get six functions and a permanent project to define the handoffs between them.

Then we hold a conference about how to improve the handoffs, which is how you spend twenty years solving an organizing problem you created by changing your vocabulary.

Here is the thing I only learned by sitting on both sides of that. After 7 years as an outsourcing advisor (say it loud and proud) I thought I knew everything about outsourcing. After 8 years at Google I found out something closer to the opposite.

Outsourcing is about as generic a process as exists. This unit of work, at this service level, for this rate, performing red or green. That is the whole thing. And yet every company, and the thousands of lifecycle participants inside it, finds its own way to complicate the living hell out of it.

That is what the renaming actually cost us. A process this generic should have one shared practice by now. Instead it has no shared name, so it has no shared practice, so every company reinvents it privately and badly - and the official process map in the demo video is missing the half where the money really goes.

So say "this is all outsourcing" out loud in a leadership meeting, and a different question becomes available: who owns this relationship from request to exit, and what decision are they allowed to make?

The work is still there. It's just buried (deep) under the software now.

The reason this is urgent and not nostalgic: the labor didn't get less outsourced. It got harder to see.

A large share of what you buy as "technology" is services and labor wearing a license. The implementation partner. The managed service inside the subscription. The offshore support pool behind the SLA. The data labeling, annotation and model evaluation work behind an AI feature - an entire category that, in my experience, went from not existing to hundreds of millions of dollars a year of spend inside one company, fast.

And notice which parts of this we're comfortable discussing. Cloud compute is fine. Scaled consumer customer support is fine - virtually no large company does that in-house anymore, and why would they, when a vendor can stand up a five-thousand-seat operation in ninety days with no capital investment. Those are safe because nobody in the room feels like they're losing a job.

The parts we don't name are the parts that feel like they're taking someone's job: the finance analyst work, the engineering contractors, the marketing production, the analytics team that's actually six people at a partner. Which means the spend we understand worst is the spend that carries the most political and operational risk.

Even the phrase I used two paragraphs ago - "vendor partner" - is me doing the thing. I've written it in my own articles. It's a good phrase for a relationship and a terrible phrase for a category, because it tells you nothing about what work is being done, by whom, where, or what happens to the business if it stops.

What I'd actually do about it this week

None of this requires a reorganization or a new philosophy. It requires using one word and then counting what it covers.

I'd rather be the buyer who can say the uncomfortable sentence than the one with twelve tidy reports that each describe a sixth of it.

We spent thirty years making the word disappear and in the process we made the work disappear too - from our reporting, our org charts, and our ability to defend any of it to a CFO. The word was never the problem. Not being able to see what it covered is the problem - and every company solving that privately, from scratch, is the bill.

A quick note on the plumbing, because it's what I work on now: the reason I built Maxx around every row of AP rather than the vendor list is that this category only becomes visible when you stop letting the naming decide what gets counted.