The news is, however, not always good. Depending on which study you read, between 25% and 30% of outsourcing contracts are not renewed after their expiration. Several dangers related to outsourcing exist, including:

• Downsizing internal departments can cause significant morale and public relations problems and cause productivity destroying "survivor's syndrome" among the remaining staff. Firms that undertake downsizing can face problems ranging from highly risk-averse employees to a breakdown of trust in management.
• Outsourcing can cause significant disruption to important processes while the transition is made.
• Training the outsourcing firm can be difficult and time consuming and customer retention can become a problem, particularly if customers learn, as they often do, that critical business processes, most notably customer service, have been outsourced.
• Communication with the outsourcing firm can be difficult at best. Expect to burn through a lot of email and potentially deal with substantial time zone issues if you are using an overseas firm.
• Some outsourcing vendors may actually re-outsource your work to subcontractors.
• Closer relationships and lines of communication between the firm and the internal department being replaced are severed. Communication between the business and the outsourcer is never as fluid as it was with an internal group.
• The investment in internal talent and training is lost.
• The most important repositories of firm experience and knowledge, middle management, are often lost to outsourcing.
• Confidential data formerly handled by the internal group is now in the hands of a third party. Depending on the vendor, your security and confidentiality might or might not be a priority or your competitors might be serviced by the same vendor.
• Though outsourcing can keep you technologically advanced on someone else's dime, outsourcing contact with the customer can eliminate your connection with critical sources of innovation, i.e. the customer's articulated needs.
• If you are outsourcing because everyone else in your industry is then you are aiming for " competitive parity" not "competitive advantage."
• Finally, your organization loses control of processes that may or may not be highly sensitive and critical to your business success.

We don't mean to paint an entirely dismal picture of outsourcing, of course. It is, after all, an important business tool. Pure outsourcing, however, is not always the ideal solution. We believe we have a good alternative in many situations.

We use our transformation team to build a self-sustaining business around the unit, often building efficiencies and forcing innovation by exposing the formerly internally focused unit for the first time to the competitive forces in the market. Many times we find that the mere fact that an internal unit has never been forced to sell externally has artificially depressed the product quality and expectations. Often we find the results are remarkable and we can achieve cost savings comparable to traditional outsourcing solutions.

Our internal expertise in crisis management and our partnership with leading crisis management firms permits us to navigate the often rocky shoals of downsizing with sellers and avoid the pitfalls associated with outsourcing.

Morale is preserved because we maintain the integrity of existing teams and working relationships. Though we may seek to augment management teams our transition philosophy dictates that we rely heavily on existing management to define the new entity's cultural and visionary focus.

Business continuity and customer satisfaction are maintained because the customer and/or the other units in your organization deal with the same, familiar people they always have. The outward face of customer touch points is unchanged. Processes and cultural distinctions are preserved and no messy transition or "growing pains" are required.

Though we pride ourselves on being good generalists and having professionals with a wide range of specialties, odds are that you and your people have forgotten more about your business than we will ever know. We don't pretend to be able to replace the decades of experience your middle managers and staff possess today. Accordingly, we look to immediately leverage these resources while at the same time grant the new entity a degree of independence and autonomy in the marketplace.

The result is a tailor made outsourcing provider, customized to your needs and with the highest expertise in the world on the only topic you care about: your business needs. This is because it is populated with the people who know more about your business than anyone on the planet. They better, you spent untold amounts training them and investing in their expertise and they spent years working in your halls and with your executives. They are, of course, your former employees.

Often times our competition for this unit is against the decision to shut the entire unit down, rather than divest it.

By instead Carve-Outsourcing™ such a unit, Catalyst permits firms to take advantage of the cost savings and process focus that outsourcing provides and remove the unit from the books, while maintaining the same trusted relationships with staff and middle management, preserving confidentiality, and preserving the innovation and strategic flexibility present pre-transaction. The result is a cost-effective, secure, trusted provider able to handle the most sensitive data and processes with ease and confidence.