Unexpected Outsourcing Contract Termination

Problem

I managed a team of engineers, outsourced to several customer teams on its premises. Those teams were all working in a single division of the customer organization; however, they were loosely connected, and often they neither cooperated nor communicated.

The customer decided to terminate the contract at some point in the cooperation. Our engagement size was at a significant level at that time – almost 100 engineers; therefore, it was challenging to stop collaboration immediately. Additionally, all parties were interested in doing this to be less harmful to the– employees, vendors, and the customer.

Actions taken

We secured excellent and transparent communication with employees. This was the critical issue as typically, in such situations, people are vulnerable to rumors and misinformation. The goal was to let the team know what the case was and what they should expect.

We involved senior management in confirming our message to employees and increasing our authority. This step showed that the situation is serious, and the company treats it with care.

We verified potential alternatives to assure that we would pick up the best available option. Several scenarios were possible – an employee could be hired directly by our customer, we could offer our employee an engagement in a different project, or an employee could simply decide to change the job. Everything had to be taken into consideration.

We agreed with the customer on the upcoming course of action. The agreement was in writing, and we previously assured that it works both for our employees and the company.

We established vital communication between the customer and our teams responsible for executing our agreement – to make sure we are on the same page.

Lessons learned

• Such a situation raises a lot of tension, stress, and emotions like anxiety and fear. It is necessary to address those by often and transparent communication.
• Even if a customer decides on contract closure, it doesn't always mean that all customer employees have the same attitude towards such a step. Usually, some would like to keep the cooperation going because this contract solves some of their problems. They may be allies during closure agreement preparations; therefore, identifying them is a good idea.
• Remember that there are at least three parties in such a situation – vendor, customer, and employees. As long as the vendor may agree with the customer on a specific course of action in the form of an agreement, employees may take their own way, and neither the vendor nor the customer won't be able to stop them from doing that.