I have worked with many organizations over the years that have replaced significant portions of their IT organization with outsourced services. In some cases the level of information technology outsourcing is a specific project, department or activity, in other cases it’s the entire IT infrastructure. Common reasons for outsourcing include cost savings, focusing on core business, promise of better service, alleviating security concerns/risk mitigation, increased flexibility and quality improvements.
One of the biggest mistakes I’ve seen over the years is not maintaining a critical mass of architecture and strategy expertise, governance and ownership within the organization. While major outsourcing organizations can and will provide many of the benefits listed above, an organization should maintain some level of control and flexibility when outsourcing major elements of their infrastructure. Don’t get caught trading short-term cost savings for long-term lock-in, strategic impendence mismatch and, potentially, increased costs. It’s a case of not letting the tail wag the dog. Maintain your ownership of the strategy/architecture and the mapping of company strategy into the IT infrastructure goals/objectives.
No matter how many staff members live in your company’s offices and how great your relationship is with the organization empowered to manage your technology infrastructure, you need to always remember that your business objectives and not the outsourcers business objectives. While the outsourcing company certainly wants to keep you as a happy, loyal, referenceable client, their accountability is to their shareholders, not to your shareholders. So that means the outsourcing organization will work to maximize their revenue, profit, and lock-in their clients to extent possible.
So I recommend retaining a core executive, technical and architecture management team that will always represent the interests of your company. This may be 10 people, a few hundred or a few thousand, depending on the size and complexity of your organization. But have this team take the lead and manage the outsourcer. While you clearly want to partner with and work with the information technology outsourcing organization, your core team will own the technology strategy, the architecture and the management of the outsourced organization.
In summary, outsourcing can provide great benefits for many organizations, but continue to manage your own destiny.
Nice Article! Outsourcing is becoming bigger every year.More and more US businesses are choosing Latin america, and Argentina,India specially, as the place they outsource operations to. And it’s especially true for companies in the IT and software sectors.
Outsourcing, allows you focus more on expanding your business while saving time and money at the same time.Especially in the case of small businesses and startups. It helps to promote the business and increase profits.
It outsourcing is a big thing especially in subcontinent countries like India , Pakistan, Sri lanka and even Philippines …Gary you have put all the key points to why outsource..thanks a ton
Appreciate the recommendation. Let me try it out.
very nice article!