Introducing Effective Ways Of IT Outsourcing
Over the years, I have seen all kinds of IT manipulation models and been on many sides of the fence. I saw that some companies organized a large-scaled IT department to support internal IT requirements, and that some other ones hired contractors to help them with short-term maintenance/upgrade requirements. More importantly, IT outsourcing, which is also the one we will mainly cover in this blog, could spare you a lot of headaches in IT configuration and be quite cost-effective---if you manipulated it properly.
There are 3 main scenarios that IT outsourcing can be a good fit:
- Limited budget: it is highly possible that the expectations of ROI for the IT solution is extremely high, or if the pressure from budget control is massive. In that case, the CIO may not have enough time and budget to handle the IT planning with internal resources, then it might be a better choice to turn to external resources for help.
- Core competitive: we have seen that a lot of huge companies especially from non-IT-related industries do not have IT department (or minimum effort) and simply hire other consulting firm to help them implementing their IT system. Because they want to spare their efforts and resources on the core competitive of theirs, and apparently that their core competitives are more important than the IT system.
- Resources: the resources an organization can obtain have been changed. In recent years, managers no longer think that "we can always make it right by ourselves". And in fact, the external experts and vendors are expertized in the specific fields that the client may not be good at, so it makes no sense for the clients to still rely on limited internal resources rather than much more selections from vendors.
IT outsourcing helps a company to save a lot of money and efforts, it enables the client to keep focus on their own core competitive and spare the IT part of job to another company of which it is the core competitive. More importantly, an experienced database administrator who will cost a company around $100 per hour to hire in US only cost around $40 per hour from India, why wouldn't I hire the Indian guy? But to achieve effective IT outsourcing, it requires coorporation among different departments in the company and there is a methodology to achieve that:
- Why should we do it? A good start point when considering IT outsourcing is to ask yourself "why should I do this", that means we need to figure out the context of the outsourcing activity. The reason could be one among the above 3, but a firm should follow a systematic approach to analyzing the context of an outsourcing activity.
- How should we do it? After the first step, we need to figure out a strategic level of plan. It is a best practice to align the firm's resources and capabilities with the outsourcing strategy. For example, although it is a lot cheaper to hire Indian vendors to help, let's say, administrate your database, it is not always a good practice if your whole operation is in US because of the time gap. Your issues may not be fixed on time.
- Quantify the results: you had better quantify the output of your outsourcing activity. There are some standardized quantify methods but may not be the best one for you. So a client needs to come up with some KPIs to assist in results evaluation.
- CIO: apparently your CIO is the outsourcing program leader, and he should be responsible for setting up the overall strategy of your outsourcing program. At the same time, the CIO is required to understand indicators and buzz words on business side.
- Subsequent investment: the client should seize any possible opportunities from the 3rd-party vendors. Especially for those leading vendors, they have knowledge management system to ensure future
Looking at just at the pricing does not represent the full picture of IT outsourcing. Many times communication is the key to stay on track and on budget while performing a project. As a proficient SAP BW/BO consulting firm, ATCG Solutions provides you in depths analysis and support for your IT requirements. If you want to learn more about our service and IT outsourcing, please click the button below.
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