Consumer Goods:<BR>Pendulum Swings Away From OutsourcingConsumer Goods:<BR>Pendulum Swings Away From Outsourcing

For consumer-goods makers, the directive is to "stay the course," as companies continue with enterprise resource planning and other large-scale projects. But there's one exception: Many companies are moving away from outsourcing.

Even as Procter & Gamble Co. prepares to enter a high-priced, high-profile outsourcing deal with Affiliated Computer Services Inc., other consumer-goods companies such as Dial Corp. have seen the outsourcing pendulum swing back. Last year, Dial underwent a six-month effort to bring all its IT work, except for routine operations, back in-house. Although many companies tout the cost savings realized by outsourcing IT and business processes, Dial IT manager Amy Bessen says her company has saved more than $1 million since the conversion. Dial had outsourced all IT operations to Andersen Consulting and was way behind where it wanted to be, she says.

Way behind, in this case, meant no storage area network and bandwidth so clogged that if anyone downloaded streaming media, everyone else's performance was noticeably and negatively affected. Bessen is most proud of the fact that the IT staff handled the entire conversion and upgrade to the company's LAN, server, and storage hardware with no outages. "We like to say it was like changing an airplane engine while still in flight," she says.

Sunbeam Corp. did likewise: Its data center, WAN, LAN, desktops, and help desk, all of which had been outsourced for five years, are back in-house. The company reports better service to its business as well as a 35% savings in the overall IT budget.

As companies weigh whether to outsource, they come down on different sides. But whatever they decide, tough economic times require IT managers to focus on staff morale. Some methods used to bolster morale haven't changed: Be family-friendly, aim for low turnover, and continue staff development so that when the economic picture brightens, talented staff will remain. It comes down to "clear and concise communication" with the IT team, says James Haney, VP of IT infrastructure at Whirlpool Corp.

Dial has addressed the culture issue directly, Bessen says. Employees agree to work under a cultural contract consisting of affirmative statements such as "We regularly communicate with each another." In July, the week WorldCom filed for bankruptcy, Dial added a statement on business ethics to the contract, calling for employees to quickly report any areas of concern.