Will Automation, Contract Work Lead to Brain Drain?

While the economy continues to add jobs at a healthy pace, it appears that more and more of those jobs are with contractors, subcontractors and outsourcing providers that handle an ever-expanding list of corporate functions, including compensation and benefits, information technology, marketing, and, in the case of one airline, reservations and baggage handling.

For corporations that farm out systems and operations that used to be managed in-house, the goal is financial savings, which can be substantial. However, as one workplace authority warns, these savings may carry a higher and yet-unrealized cost – the significant loss of institutional knowledge and corporate memory that allow companies to react to crises, solve new problems, and provide a consistent customer experience.

“The use of outside vendors, rather than retained, salaried staff allows companies to quickly adapt to changing business conditions. They can grow and shrink as necessary without as much cost or disruption. And, they can focus more resources on strategic initiatives and objectives,” said John Challenger, chief executive officer of global outplacement and executive coaching firm Challenger, Gray & Christmas, Inc.

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