Outsourcing
by Judi Brown and Joellen Fletcher
 

Introduction

    In the summer of 1995, General Electric Co. decided to outsource its headquarters’ information service to a company called Teltech. Information professionals had seen functions in libraries outsourced for many years but the outsourcing of an entire special library posed a serious threat to the profession. Slowly special librarians have begun to understand that in some instances it is better to bring in services from the outside to achieve quality services than to do everything on their own (Eddison, 1997). This chapter will examine several aspects of outsourcing and will provide an outline and resources for planning an outsourcing program.

Table of Contents

I. What Is Outsourcing

II. The Changing Nature of Corporate Libraries

Research Services

Training Services

Information Systems Services

Information Consulting Services

Record Keeping/Archiving Services

Competitive Intelligence Information Gathering

Subscription & Circulation Services

Cataloging Services

Staffing

III. Why Corporations Outsource Their Libraries Reduction of Costs

Centralization of Services

Control of Access

Desktop Access

IV. Approaches to Outsourcing Total Outsourcing

Partial Outsourcing

Electronic Database Services

V. Planning and Implementing an Outsourcing Program Evaluating Existing Processes and Costs

Designing Outsourcing Services

Vendor Selection

Negotiating Costs and Reviewing Contracts

Profiling and Testing Services

Evaluating the Service

Assessing Outsourcing Costs and Savings

Library/Vendor Communication

VI. Advantages and Disadvantages of Outsourcing Advantages

Disadvantages

VII. Impact of Outsourcing on the Profession

VIII. Resources

IX. Conclusion

X. Bibliography

I. What Is Outsourcing

    Outsourcing is a trend found in many types of libraries today and is roughly defined as, the practice of contracting for the provision of specific services by people outside of an organization (Eddison, 1997). Although outsourcing has become part of the reengineering revolution that is found in today’s business world, the idea has been around for several centuries. As early as 1476, Monks in San Iacopo di Ripoli, "employed the services of several printers in their press and nuns were employed in the composition and illumination." (Eddison, 1997) In the 1970’s, outsourcing only involved a supplier who managed a function that was formerly carried out in-house. The 1980’s saw outsourcing begin to develop into closer relationships between the company and the vendor providing the outsourcing. Ultimately, in the 1990’s, the relationship between the two companies evolved into partnerships. Today, as companies and organizations reengineer and downsize, tasks performed by the business are examined to see if they really need to be performed in-house or if they can be outsourced or completely eliminated. During this reengineering trend, Corporate Information Centers or Corporate Libraries have found themselves becoming targets for corporate outsourcing.

II. The Changing Nature of Corporate Libraries

    The 1990’s have witnessed many changes within corporate libraries. These changes range from a change in library size to types of services offered to non-traditional staff requirements. These library changes are a reflection of changes within the parent organization. This section will cover 9 major areas of library services that are currently undergoing an evolution within corporate libraries. These services are: research services, training services, information system services, information consulting services, record keeping/archiving services, competitive intelligence information gathering, subscription and circulation services, cataloging services and staffing.

Research Services

    According to the Special Libraries Association, research type questions are time-intensive and may require a librarian to spend as long as an entire day working on one research request. This allows the librarian less time to attend to others requests and his/her daily job functions. One librarian at a communications company reported conducting about 600 searches annually, which take anywhere from 1-3 days each (Portugal, 1997, p.9). Some libraries get outsourced help to handle some of these time-consuming research requests. One company pays four outsourced librarians to conduct 20 percent of their research requests. Another option for time-crunched librarians is to limit the type of request they will perform for their clients. One library surveyed by SLA reported that they are no longer searching for engineering or technical information. At another library, any research requests that do not fall under the library’s primary mission statement are referred to the appropriate department for an answer. The exception to this rule is if the request comes from executive management. In those cases, the librarian will give the request top priority (Portugal, 1997, p.10).

Training Services

    One of the leading ideas in corporate culture right now, is the idea of making information accessible to every employee. Training of employees to use library services such as online catalogs, the Internet, Intranets and other online databases are becoming common practices within corporate libraries. Some libraries offer training classes, others have written instructions at every computer workstations, and others provide a library staff person who will assist with questions (Portugal, 1997 p. 10).

Information Systems Services

    With the increasing use of email, Internet access and online databases, corporate libraries are increasingly using the services of a systems librarian. The systems librarian is responsible for the design of the company's web site, the company Intranet, and maintaining the companies electronic email and database systems (Portugal, 1997, p.11).

Information Consulting Services

    The clientele that a corporate library serves is changing. Many corporate librarians are becoming information consultants both for the internal clients and increasingly to external clients (Portugal, 1997, p.11).

Record Keeping/Archiving Services

    Many corporate libraries carry the responsibility of providing the organization and storage of company records. The library is also increasingly needed to provide these company records online in a database or on the company Intranet.

Competitive Intelligence Information Gathering

    Many corporate librarians are involved in the gathering of competitive intelligence found within the public domain. According to author Ruth Pagell, of Emory University’s Woodruff Library, competitive intelligence gathering is the part-time responsibility of the corporate librarian in over 90% of corporations (Pagell,1998). Another librarian stated that her role within the corporation is to predict future changes within the company and industry (Portugal, 1997, p.12).

Subscription & Circulation Services

    Libraries are increasingly discontinuing these services due to inflated costs of journal subscriptions and lack of control over where the materials go within the company. One library modified its circulation service by warehousing their materials in a separate building and staffing a tele-request line with clerks who send requested materials from the warehouse to staff members via company mail (Portugal, 1997, p.12).

Cataloging Services

    Some libraries continue to catalog their materials and maintain an online catalog while other corporate libraries are being consolidated into a core collection for general business use. Some of these core collections are being supplemented with internally produced documents which are made available on the company Intranet which leads to a decreased use of a traditional online catalog for finding information resources (Portugal, 1997, p.12).

Staffing

    The staffing requirements of corporate libraries are also changing. Traditionally, corporate librarians have held a MLIS degree and specific subject knowledge. As corporations change the way they staff their libraries, they hire more non-degreed employees to run the library.

III. Why Corporations Outsource Their Libraries

    Often another company’s decision to outsource an internal library becomes a trigger for other companies to follow suit. Corporations cite the main reasons for outsourcing are to reduce costs, to centralize services, to control access and to focus on the desktop access of information for all employees.

Reduction of Costs

    According to one senior executive, outsourcing the entire library costs only about 40% of what the in-house library cost (Portugal, 1997, p.16).  Some organizations feel that they would spend less on literature searches if they hire out for this service.  Both dollar and time costs can escalate when research is conducted in-house.  Some organizations are tending toward an outside service to meet a majority of their research needs, rather than have an in-house library to serve all employees.

Centralization of Services

    Many corporate libraries are partially outsourced to allow more time for the librarians to focus on other tasks, such as research or competitive intelligence (Portugal, 1997 p.16). One company outsources distribution of materials. Printed materials are purchased in bulk and housed at a fulfillment center. When employees need those materials, they use an 800 number and purchase those materials with their corporate credit card (Portugal, 1997, p.16).

Control of Access and Desktop Access

    The outsourcing of electronic databases can allow a company tighter control over access to sensitive company information. Through the use of assigned user identification numbers and pass codes, a company can monitor who is accessing information.
One focus of corporations has been to limit the number of print sources and the space to house them, in a effort to decentralize the libraries resources. Cataloging and subscription services are being outsourced so that more attention can be given to the expansion of online resources that are available on every computer desktop.

IV. Approaches to Outsourcing

    A 1997 study commissioned by the Special Libraries Association, found that corporations approached outsourcing in three different ways; total outsourcing, partial outsourcing, and electronic database services.

Total Outsourcing

    Total or full outsourcing is when libraries are completely outsourced, either by contracting with an organization to staff and administer the library for a set fee, or by staffing the library with consultants rather than employees (Bates, 1997). When this approach is taken, the company loses employees who understand the corporate culture, products and services of the organization. The outsourcing company does not necessarily understand the long term corporate goals of the company or the information needs of its library users. The 1997 Special Libraries Association study found that companies, who used total outsourcing, tried to overcome this obstacle by working hard to communicate their needs to the outsourcing vendor. The outsourcing librarian for one of these companies worked closely with her company manager to constantly assess the directions of both the company and information services needed (Portugal, 1997, p. 19). In another example, the company elected and paid for additional specific services to be provided by the outsourcing vendor. The additional tasks ranged from standing monthly orders of search requests for current information on specific topics to the availability of additional specialized publications to the subscription list. The services provided were relevant to the needs of the organization and were in addition to the regular library functions. Both are examples of how companies must work at communicating their needs to vendors when fully outsourcing library services.

Partial Outsourcing

    When companies partially outsource, outsiders, such as library student interns, temps, or vendors are used to get some specific task done. The day to day operation of the library stays in house and is maintained by company employees. Partial outsourcing is often also called co-sourcing or out-tasking. Cataloging is one of the most obvious jobs to outsource, particularly for smaller libraries that do not have a collection large enough to justify a full-time cataloger (Bates, 1997). Some special libraries rely on document delivery companies to replace tasks such as interlibrary loan, subscription management and book ordering. In the Special Libraries Association study, it was found that several companies outsourced overflow research requests and used outside vendors for subscription services.

Electronic Database Services

    Many companies use electronic database services as a compromise for downsizing and consolidating the corporate library while avoiding closure or total outsourcing (Portugal, 1997, p.20). Corporate Information Centers have saved their companies money by networking databases through company Intranets, allowing users throughout the organization to access information from the databases at their own desks. Electronic database access throughout the company can broaden the user base and save the company money, which saves the corporate library.

V. Planning and Implementing an Outsourcing Program

    Often corporate information centers are the last to know that they are going to be outsourced. The smart librarian constantly evaluates costs and uses outsourcing when it is financially and/or politically the best way to get the job done. Staying aware of the financial and political realities of the organization in which librarians work is critical to the library’s success ( Helfer, 1998). Information professionals should be prepared to plan and implement an outsourcing program.

    The planning process for an outsourcing program requires adequate time and staffing depending on the size of the information center. Strategic thinking, planning, and testing must be done prior to the implementation of any outsourcing procedure. Often, outside consultants are brought in to assist in the process. Consultants bring with them an outsiders point of view and can question current processes, perform cost-analysis and even boost the morale of the staff.

Evaluating Existing Processes and Costs

    The first step in exploring the possibility of outsourcing is to conduct an analysis of existing processes and costs. The analysis should begin with a review of the policies and procedures currently in place and of the processes themselves. This process-analysis phase is a good method for identifying immediate ways to streamline processes, before advancing further with an outsourcing plan (Wilson, 1997). If it is decided to outsource a function, then the analyzed information will be used to explain the process to the vendor.

    Cost analysis should be conducted at the same time as the process analysis and should include a gathering of all data that pertains to each individual function being examined. If the library decides to outsource, then the information will be used to first compare the costs of services offered by vendors to current costs and later to determine cost savings as a result of outsourcing. Prior to outsourcing, this data can be useful in illustrating how successful staff were in reducing overall costs by streamlining internal operations (Wilson, 1997).

Designing Outsourcing Services

    Once the analysis phase is completed and the organization has decided what functions to possibly outsource, vendor information must be gathered. It is best to gather as much information as possible and then discuss the outsourcing possibilities with all members of the internal staff to determine or discover additional ways that individual needs in the organization can be met by outsourcing. A written draft of the outsourcing plan should then be created and should include: a description of the redesigned operation; details about the outsourcing services to be provided by vendors; and a time schedule and strategy for implementation of the outsourcing program (Wilson, 1997). The report should be distributed to all interested parties so comments can be made before the final draft is completed. Please keep in mind, that vendors may not be needed, depending on the procedure the organization has decided to outsource. In the design plan, the library may decide to utilize temps or library interns.

Vendor Selection

    The first step is to request information from vendors based on the outsourcing program outlined in the written draft. This is an education phase for the library staff and should be used to listen to vendor presentations, tour vendor facilities, screen vendors who do not meet the basic requirements, and review all aspects of vendor operations. Toward the end of this phase, vendors will usually submit formal proposals to the organization.

Negotiating Costs and Reviewing Contracts

    Once a vendor has been selected, upper management will begin reviewing and negotiating final costs for the service. It is important to cover as many details as possible in the contract. This phase would also include review of requests for temps or library interns in organizations that do not choose a vendor but decide to co-source.

Profiling and Testing Services

    Once the plan has been made and the vendor has been chosen, the library staff will work closely with the vendor to develop a profile of organizational requirements and specifications (Wilson, 1997), The vendors will usually provide the organization with paperwork to complete that will profile the service needs of the organization. Once the profile is complete, both the vendor and the information center should jointly test the quality of the program or service. The testing phase will usually uncover bugs in the system design that can be eliminated prior to implementation. Testing services should still be conducted in situations where temps may be used and a vendor is not involved.

Evaluating the Service

    Keep in mind that outsourcing does not result in complete abandonment of all responsibility for oversight of an operation, just because a vendor has begun to provide services which were once performed in-house (Wilson, 1997). The service must be evaluated whether full outsourcing has occurred, a partial outsourcing of a particular function, or if a service is handled by temps. The organization should most likely maintain a high level of quality control during the initial phases of operation and eventually conduct a routine evaluation process. The evaluation process used may be similar to those used for evaluation of other library functions.

Assessing Outsourcing Costs and Savings

    When examining the impact of outsourcing on the organization, the bottom line should be looked at in relation to the organization as a whole. It is recommended that two methods of capturing cost data be used: measure unit costs/savings and to monitor aggregate cost/savings. Often organizations will find immense savings in one outsourced function but little to none in another. Cost and savings should be examined: three to six months for the initial stage, six months to one year for the following phase, followed by periodic monitoring on an ongoing basis for the life of the outsourcing program ( Wilson, 1997).

Library/Vendor Communication

    Communication between the organization and the vendor is vital to the success of any outsourcing program. A vendor needs feedback from the client in order to improve a service. It is important to establish and maintain excellent communication between the organization and the vendor during the lifetime of the outsourcing program. It is important that the vendor understand the mission of the company and the needs of the users of the information center. An outsourcing program will only be successful if the needs of the organization are met.

VI. Advantages and Disadvantages of Outsourcing

    Outsourcing is not the answer for every company. Organizations must look at all the pros and cons prior to undertaking and an outsourcing program.

Advantages

    Most advantages affect the company as a whole in areas such as economic gains and increased competitiveness. Cost cutting is the number one reason to outsource a library function. Outsourcing a whole library or even particular functions can save the company money in intangible areas such as employee benefits. The library itself may even benefit if the money saved remains in the library budget. Partial outsourcing also makes it easier for the library to charge back services provided by the vendor to specific departments within the organization. The bill from the vendor can be forwarded directly to the area that received the service.

    Outside vendors often bring expertise to the library that was not available in the current employees. A vendor providing subscription or cataloging services will have employees on staff who have experience in just those areas; experiences that an information professional in a small library may not have had a chance to expand. Also because vendors are more production oriented, productivity may increase.

    Libraries that outsource only specific functions have found that they have more time to concentrate on other core services. Special libraries that outsourced technical services, had more time to spend researching requests for the company. Using vendors also often permits the information specialist more control over the outsourced function. Libraries can cancel a contract with a vendor if the quality of service provided is not satisfactory. It is harder to identify and handle problems with internal staff. Use of vendors also eliminates hiring, training of staff, and dealing with problem employees.

Disadvantages

    Most of the advantages mentioned above apply to a partially outsourced library and could be considered disadvantages when used in the context of a fully outsourced library. Staff morale can suffer as library positions are reduced or eliminated altogether. In fact, partial outsourcing may cause current employees to worry that their position will be the next target. Because the employees who remain may distrust management after outsourcing, administration should treat moral problems seriously and work with staff to rebuild their trust and loyalty.

    Outsourcing also can cause a certain loss of control over functions. When companies are locked into contracts with vendors, they loose a degree of flexibility and may not be able to respond quickly to new demands. This also leads to the problem of communication between the company and the vendor. If bad communication occurs, then the goals of the company and needs of the employees may not be met by the vendor. Companies who outsource, take this chance. Organizations also take the risk of loosing intellectual capital. Special libraries who outsource the whole library lose the knowledge of the employees who staffed the library. Vendors will not be as familiar with the company’s mission or services. Likewise, contracted workers have no memory of the organization, are not asked to participate on teams, and are not trusted with sensitive information. Thus they have no loyalty to the company. The company may save money on employee benefits but they loose loyal and knowledgeable company employees and the quality service they provided.

VII. The Impact of Outsourcing on the Profession

    The pros and cons of outsourcing have been listed, now is the time to discuss the impact of outsourcing on the profession as a whole. It is unfortunate to our profession, that corporate executives often view the library as a tempting target when they need to reduce budget expenditures in part or all (Helfer,1998). Because of this, librarians seem to view outsourcing as a threat to their existence within the corporation. Then again, in some cases outsourcing is the only way that a one-person library can be run or that an event, such as opening a library can be managed with limited staff. Opinions vary among professional librarians regarding the positives and negatives of outsourcing. Overall, librarians agree that outsourcing should not be applied to core services. At an ALA Outsourcing Task Force meeting, one librarian said, "I think you are shooting yourself in the foot as a professional if you can’t define what you are uniquely suited to do" (St. Lifer and Rogers, 1998). Another librarian stated, "Of all the outsourcing functions, only selection has been challenged seriously as an abdication of the library’s role" (St. Lifer and Rogers, 1998). These comments reflect the concern among librarians that a reliance on vendors can lead to an erosion of the librarian’s role within the organization. On the other hand someone has to have the skills to manage all the outsourced functions and make sure that the parent organization is getting the information it needs to remain competitive in the industry. Like most things, there are two sides to the same coin.

    Another factor that comes into play are the outsourcing companies themselves. Are they run by librarians or by other professionals? Both kinds exist. One company, Advanced Information Consultants, AIC, offer the motto, "librarians working with librarians, not against them…" to establish trust among potential clients (Eddison, 1997). The Association of Independent Information Professionals (ALIP) is an industry association of information businesses who provide a variety of services to their clients. Some of their services are: "online database searching, general research, market and industry surveys, document delivery, public records research, thesaurus building, indexing and abstracting, digital library development, competitive intelligence", and more (Eddison, 1997). There are also information service companies run by non-librarians. NERAC, a non-profit corporation located in Connecticut, offers services to help clients remain competitively active and to increase productivity (Eddison, 1997). The president of NERAC has been a supporter of special librarians and his company participates in SLA conventions. Another information service company is Teltech, based in Minnesota. Teltech began as a personnel provider for technical, scientific and engineering fields, then branched into online database searching for those industries (Eddison, 1997). Overall, opinions vary and every library is unique in its ability to handle its information needs.

VIII. Resources

    Outsourcing is a hot topic in corporate America today. Literature on the topic may be found in many different journals as well as in library journals. Several of these resources may be found in the bibliography that follows this chapter.

    Information specialists who are considering outsourcing should also review some case studies that have been conducted within the library field. One such study is called the Hawaii Model and involves the decision by the Hawaii State Public Library System to outsource collection development with Baker and Taylor. All Information specialists should review the Special Libraries Association study on outsourcing in corporate libraries as well as searching for "outsourcing" on the SLA web page available at http://www.sla.org.

    The Outsource Institute was founded on the spring of 1993 and provide products, services, and a Buyers Guide to the outsourcing community (Eddison. 1997). Information can be found on the Internet at the Institute’s home page,   http://www.outsourcing.com/.  Finally, there are several companies that provide outsourcing services to the library field such as Telesec, Teltech, and Advanced Information Consultants. Several companies may be found on the Internet by conducting a search in Yahoo (http://www.yahoo.com) for library outsourcing. A few examples are: LMS (Library Management Services) at http://www.librarymgmtsvc.com; The Cadence Group at http://www.cadence-group.com; and CARR Research at http://www.carr-research.com.

IX. Conclusion

    Information professionals today need to keep their eye on the bottom line. Outsourcing is a tool that can be used if and when it makes sense for the organization. Special librarians still need to market their information centers and let management know about your successes. Prove to the organization that the library and it’s staff are vital to the mission and goals of the company. By managing the library well, marketing the services offered and keeping things in perspective, outsourcing may not be a surprise in your library's future.

Bibliography

Bates, Mary Ellen. (1997). Outsourcing, co-sourcing and core competencies: what’s an information professional to do?. Information Outlook, 1(12), 35-37.

Benaud, Claire-Lise and Bordeianu, Sever. (1998). Outsourcing library operations in academic libraries. Englewood, CO: Libraries Unlimited, Inc.

Eddison, Betty, Bjorner, Susanne, and Stear, Edward B. (1997). Our profession is changing: whether we like it or not. Online, 21 (1), 72-82.

Hefler, Doris Small. (1998). Outsourcing, teaming, and special libraries: threats and opportunities. Information Outlook, 2 (12), 26-29.

Portugal, Frank. (1997). Exploring outsourcing: case studies of corporate libraries. Washington, DC: Special Libraries Association.

Wilson, Karen A. (1997 February). Planning and implementing an outsourcing program. American Libraries Association. [Homepage of ALA], [On-line]. Available: http://www.ala.org/alcts/now/outsource.html [1999, April 12].


Web page written by Judi Brown & Joellen Fletcher to meet the requirements of CLIS 724.
Last updated May 5, 1999.
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