Information Technology (IT) Outsourcing

Submitted By: Kashif Zubair, CEO, Adroit Business Solutions

IT is a critical part of the business process that can require technical competence beyond the scope of the current management. Whether you need help making business vision a reality, designing processes to support new solutions, or developing a more effective approach to ongoing support and maintenance requirements, outsourcing companies provide the multi-vendor expertise and services you need.

Outsourcing is a business strategy that many corporations have been using for decades. Increasing numbers of businesses and other institutions are outsourcing their information technology requirements to:

1. Reduce costs and internal staffing commitments;
2. Release capital to more productive uses and focus on core business competencies;
3. React quickly and adapt to the changes in the marketplace and gain access to specialized expertise; and
4. Establish or strengthen strategic business relationships.

For small businesses that only have budget to hire a few individuals often find that by outsourcing their projects, they are still able to obtain access to a wide range of high level skills. Outsourced development companies can apply the best skill for each phase of a project. This flexibility and the availability of a larger talent pool provide optimum results at the lowest cost.

However, outsourcing is not free of risk and requires effective management from the outset of the outsourcing evaluation through the life of the contractual relationship. Effective IT outsourcing requires a partner that not only understands the complexity of the outsourcing decision, but company’s business, as well. According to recent studies from major Big 4 auditors, 69% of all outsourcing deals fail, completely or partially. The main reason for this is lack of cultural compatibility between the vendor and the customer and poor relationship management. Many companies are acknowledging the fact that the success of the outsourcing project depends on a quality management of the outsourcing relationship.

Following are some of the critical factors for successful outsourcing.

• 1. Objectives
  As with any project, outsourcing should have clearly defined objectives. It should be done carefully, systematically, and with explicit goals. Overall merits of selective outsourcing should be considered periodically.
• 2. Key Considerations
  Following is a list of key considerations for areas that should be explored during the process of evaluating the option to outsource:
  • Identification of core business competencies.
  • Services or corporate support functions, which are not integral to or close to core competencies.
  • Barriers raised by the corporate culture.
  • Cross-functional impact.
  • Goals to be achieved.
  • Value addition by an outside vendor.
  • Vendor-customer relationship.
  • Process to deal with the people issues.

Conclusion
Vendors do provide a lot more value to any organizations of any size if a relationship is established in a thoughtful manner. Like any relationship, whether it is internal to the organization or external, companies that decide to outsource should consider the following to get positive results:

• Establish a relationship management system, where both parties have commitments/deliverables defined based on objective performance criteria along with the resources to solve issues. For each team member, a training schedule should be set-up to cope with the changed environment.
• Look for the outside assistance, the best way to go for it is to talk to your industry peers, who have been in this situation before.
• Look for the best pricing and servicing models through negotiation techniques with key vendors.
• Adopt a reporting structure, where each stakeholder is well informed about the progress, so action can be taken to resolve an issue, when needed.

Kashif Zubair is a seasoned information systems auditor and strategist. He currently manages key functions within multiple companies (Adroit Business Solutions – www.adroitbs.com and Urooj Corporation – www.urooj.net) in the area of information technology consulting. His past experiences include, Ernst & Young, Arthur Andersen, and PricewaterhouseCoopers. He can be reached at kashif_zubair@hotmail.com.