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AchievethePerfectBlendofOutsourcedvs.In
HouseIT
PostedbyJonathanCraneonMay30,2013at10:58am
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TheageoftheholisticIToutsourcetheIdontneedanITdepartmentbecauseIhave..."approachis
past.Butselectiveoutsourcingofkeyfunctionsandactivitiesisacommonwayforbusinessestorealize
benefits.
Outsourcingcertainlyhasitsupsides.Firstandforemost,manycompanieschoosetooutsourcebecausethey
canachievethecostefficiencybenefitsthatareimportanttoanyorganization.Second,thescaleand
experienceofanoutsourcercanaddfreshperspectiveandinputthatmaynotbeavailablefromfixedinternal
staff.
However,outsourcingITsupportcanalsohelpdriveinnovationandchangebyfreeinguptimeforinternal
ITstafftospendondevelopmentprojectsthataremorecloselyalignedtoachievingbusinessobjectives.So,
howshouldorganizationschoosewhichpartsoftheITfunctiontooutsourceandwhichtokeepinhouse?
Aprudentandcommonapproachistoscrutinizeitsbusinessmodelanddefinethecomponentsthatare
missioncritical(corefunctions)againstthosethatarent(contextualfunctions).Forexample,emailmightbe
consideredcontextual,buttradingapplications,core.Or,servermanagement,contextual,butapplication
support,core.
Anaddeddimensionwillbetoassessthecostsofinternalversusexternaldelivery,consideringwhich
functionsmaybesubscaleorresourceintensivetoprovideinhouse.

Finally,organizationsmustconsiderthehandoffpointsandinteractionsbetweenfunctions.Dovarious
teamsneedheavyongoinginteraction,orcantheybeconsideredisolatedasafunctionaltower?
Aftercarefulthought,acompanycanexpecttoendupwithahybridsolutionincludingtherightblendof
bothinhouseandoutsourcedservices.
Ofcourse,therearesomedownsidestooutsourcingthatneedtobeconsidered.Themostcommonobjection
tofunctionaloutsourcingisalossofcontroloverhowagivenserviceisdelivered.Anotherdownsideisthat
outsourcing,andmoreparticularlyoffshoring,canoftencomewithcompromisesonquality,highstaff
turnoverandlackofinnovation.
Becauseofthis,itsimportanttoconsidernotonlycostsbutthekeyaspectsofhowservicesarebeing
delivered,howservicequalitywillbemaintainedandimproved,andhowinnovationandchangewillbe
drivenintothepracticesoftheoutsourcer.ConcreteSLAsandevaluationmetricsshouldbeputinplaceto
ensureserviceprovidersfocusondeliveringinnovativeservicesanddrivingcontinuousservice
improvement.
AnotherchallengeassociatedwithhavingsomeaspectsofIToutsourced,andsomeinhouse,isthatitplaces
anewandincreasedloadonanorganizationsITfunctiontoprovideservicegovernance.
ItsimportantforanITfunctiontohaveaholisticviewacrossallbusinessservices,whetherthe
underpinningdeliveryofthoseservicescomesfromexternalproviders,internaldepartments,ora
combinationofboth.Oneofthethingsmostcommonlyoverlookedwhenoutsourcingaserviceishowthe
providerintegratesintotheotherpartsoftheITfunction.
AsservicegovernancebecomesanincreasinglyimportantfunctionoftheITdepartmentofthefuture,
organizationscantaffordtobehamperedbyaninconsistentanddisjointedviewofserviceoperations
obtainedfromoutsourcingtomultiplesuppliers.
Whenconsideringthosefunctionsthatanorganizationdecidesarenotprimecandidatesforoutsourcing,it
shouldnotbeassumedthattherearenosignificantcostsavingstobehadfromtakingadifferentapproach.
Forexample,theuseofautomationtechnologycandrivehighlevelsofefficiency,whilekeepingthecontrol
andownershipofITmanagementwithinacompany.AutonomictechnologyautomatesroutineITjobsand
businessprocessesthatwouldusuallybecarriedoutbyworkerseitherlocallyorinoffshorelocations.
Thisisatrendweexpecttoseeaccelerate.Inthepastdecade,replacementoftheworkforcewithcheaper
laborhasbeenprevalentthenextdecadewilllikelyseethephasingoutofcheaplaborandtheintroduction
ofautomationtechnology.Itsashiftfromamodeloflaborarbitragetooneoflaborautomation.
Partofthereasonwecanexpecttoseethisshiftisbecauseofthegrowingpressuresfacedbyoffshore
suppliers.WithanincreasinglycompetitivemarketforITengineersinemergingmarkets,manygraduatesare
nowbeingmadehalfadozenoffersfromarangeofmultinationals,notjustITvendors.Forexample,Mercer
expectsindustrysalariesinIndiaalonetogrow12percentthisyear,thesameasin2012.Asthewagesof
workersinoffshorelocationsincreases,sodoesthepressureonoutsourcerstosupplythesamequalityof
servicewithadwindlingsupplyoflowcostengineerstodeliverthejob.Whenworkersaresecured,high
levelsofstaffturnovercausedbystrongdemandforskillsandexperiencemeananalmostconstantstateof
flux.
AnotherreasonforintroducingautomationtechnologyisitsimpactontheITfunction.Recentresearchfrom
0
IPsoftandQuocircashowedthat69%ofITdecisionmakerswouldprioritizemodernizingtheirIT
infrastructureiftheirITstaffhadmoremanhoursattheirdisposal.Byautomatingmundaneandrepetitive
tasks,ITdepartmentscanusetheirskilledstafftosupportprojectsthatdrivebusinessinnovationratherthan
focusingonkeepingthelightson.
Tosomedegreeforeverybusiness,alevelofIToutsourcingisinevitable,whetheritsusinganetwork
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provider,deployingsoftwareasaservice(SaaS)toolssuchasSalesforce.com,usingoffshoreprovidersto
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decreasethecostofresources,oroutsourcingwholefunctions.TheimportantthingforCIOstoconsideris
howtoensureconsistentservicedelivery,howtointegratemultiplesuppliersinanincreasinglyhybrid

landscapeandhowtoensurethatthefocusofthedepartmentisoninnovationandchange,noton
2
maintenanceandsupport.Outsourcingcanhelp.Automationcanalsosupportthisagenda.Anda
combinationofbothisoftentheroutetogreatestefficiency.
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JonathanCraneischiefcommercialofficeratIPsoft.
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