When oil giant Royal Dutch Shell made ill-judged announcements about outsourcing thousands of IT jobs on unfavourable terms, it left skilled internal IT staff feeling devastated and undervalued... the same staff who might be outsourced if plans go ahead. This was an object lesson in how not to do it.

This month Shell's CEO has again been talking up the need to cut costs and outsource technology innovation. At the same time oil prices have soared to $110 a barrel, profits are in the tens of billions, and he is on record as saying there is no problem with global supply.

What a strange time, then, to let the story slip out that its outsourcing strategy seems to be shrouded in uncertainty.

A story has broken that Shell is locked in talks with suppliers and now seems undecided on the fate of the major IT outsourcing plan that it revealed earlier in the year.

In January Shell courted controversy and union protest when it emerged that it planned to strip out or outsource up 3,200 IT jobs, on severance plans that were significantly poorer than those for other professionals within the company.

However, in a document sent to staff today, and reported by The Register, Shell said: “At this stage it has not yet been decided if Shell will actually outsource all or part of its global IT infrastructure activities, if so who the supplier(s) will be and how the outsourcing will be structured.

“However, if the outsourcing is to be implemented it will undoubtedly have an impact on the employees working in the relevant part of the IT infrastructure activities in the UK.”

This would seem to be a significant backwards step by a company that earlier in the year said that staff would be dismissed who were superfluous to any successful outsourcer's requirements.

Suppliers in the frame to date have included EDS, T-Sytems and AT&T.

Like any company, Shell would like to reduce its costs but it is doing so within the very public global context of over $110 per barrel of oil (Monday this week), potential fuel protests, and 2007 profits of some £13.9 billion ($27.4 billion). Not a sector being torn asunder by recessionary forces, it seems.

If, as seems likely, the US is in recession (judging by the downward plunge towards zero of interest rates) then some energy speculators are betting that, far from falling, oil prices will remain in triple digits for as long as five years (with short-term falls and corrections).

Prices would be kept aloft by commodity investors and producers as a hedge against political instability, uncertain long-term supply, and the downturn in other economic sectors such as property and banking. A possible scenario, then, is energy ceasing to be a utility, and becoming the new gold dream of the decade: something the environment would happily sustain, no doubt.

In such a global energy economy where cheaper oil currently only exists along the sharp political knife-edges of Iran, Iraq and Venezuela (two of which can trade with their allies how they wish) oil giants are going to have to maintain a public face of cost-cutting, care, and innovation, while also struggling to satisfy the West's oil addiction at whatever price it can afford to pay.

Shell CEO Jeroen van de veer said: "From the physical point of view there is no high alarm. It's difficult to understand why the oil price is where it is. No tankers are waiting in the Middle East, there are no queues for the retail stations here."

In Shell's annual report, the CEO said: “Operation excellence, technology and good project management remain central to our efforts to produce more energy from conventional oil and gas and unconventional sources such as oil sands.

"If we do not develop the right technology or do not have access to it or do not deploy it effectively, it may affect delivery of the strategy as well as our operational performance and financial position."

He then suggested that technology outsourcing was a cornerstone of the company's strategy moving forward: “more reliance on global systems, relocation of information technology services and increased regulation” were the challenges, he said.

So once again a global company finds itself on the horns of a number of (self-inflicted) dilemmas, as regards the politics of outsourcing.

The first concerns the sourcing of innovation versus the stated need to make cost savings at a time when business in its sector, at least, seems to be booming for investors.

The second concerns the PR implications of making sweeping announcements about sourcing strategies that leave vital, skilled internal staff feeling threatened and undervalued – before being asked to move to a new employer, perhaps.

And the third concerns the fact that in the always-on, mobile world of social networking, you can be the story, but you can no longer manage the news.

In conclusion, when you outsource, do it for strategic reasons that free you up to do what you do best; involve staff; play fair; and proactively tell a good story – not boast of your power in a downturn.