Information Technology Management with a Purpose

Jul 12 2010   8:07AM GMT

To outsource or not to outsource?



Posted by: S R Balasubramanian
Tags:
CIO career
outsourcing

The outsourcing story is gaining ground in India, and is now widely practiced. Many organizations now look at external sources to manage some of these services, and all have their own logic about what they have outsourced. There has perhaps been no study to assess whether outsourcing has really been able to deliver the results in each case, and whether the model adopted by them was the best one possible.

Some organizations believe in outsourcing routine repetitive activities like facilities management, data center management, and software development, but keep the high level tasks in-house. Others believe in strategic outsourcing, and involve high profile consultants as advisors to give directions while keeping the menial functions within their organization. So the outsourcing story is not uniform, and depends on the organization’s stated purposes.

The question is not whether to outsource or not, but of which IT functions to outsource. It is important to choose the right outsourcing model that is most suitable for the organization. Models of outsourcing vary; it could be a complete outsourcing of IT, with only the CIO being retained as a co-coordinator. We have seen such examples in MNC organizations; examples in the telecom sector and among big IT players do suggest such a route to the corporate. The other model is one of partial outsourcing where one or more IT functions are completely outsourced. Some of the best exampled include passing on of routine tasks like facilities management, help desk, data center management, software development, application support, or tasks like 24/7 security monitoring. This eases the CIO’s burden, and he can then concentrate on delivering value to business.

In some cases, outsourcing is initiated by the management when they feel that services delivered by the IT Department are not satisfactory—either due to low performance, or due to attrition. In the other cases that I have seen, CIOs take the lead and put up a proposal to the management with sufficient explanation citing better delivery and cost savings, besides other factors like making use of external skills and service level agreements (SLA). As CIOs, we have to seize the initiative.

Perhaps, outsourcing has become so common and easy to practice that I often wonder whether this topic is now too relevant to debate. I would love to hear from people who hold contrary views.

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  • hoaxirity
    Outsourcing your IT offshore is a nice strategy not only to maximize your budget but also to fortify your IT tasks. Ironically as it might sound but many companies use Cloud computing to maximize the value of the company through outsourcing, take Singapore for example. It all boils down to proper management as pointed out in this post. If a 3rd party comes into the picture then be sure that it's trustworthy and has policies regarding data confidentiality. There are outsourcing companies today that contract staff to work like regular employees. When considering outsourcing of any tasks, planning is the most critical part.
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