Yes, IT outsourcing is surely a double edge sword as it offers of lucrative cost saving but at the same time it need to be planned and executed efficiently. There are a lot of risk and I would not be able to script all here but I will draw your attention on three major risk one should keep in mind while on an outsourcing journey.

Some of the grey areas which it houses are :
a) Change Management – Here you are changing the way your organisation work. Therefore you need to make this number one priority of institutionaling the change process. Outsoucing involves changes – from people to processes to organisational dynamics. Choose a partner who focus not only on Technical Scope but also on softer aspects which ultimately play the vital role in acceptance of that change.

b) Quality – Outsourcing is only fruitful if an organisation is able to strike a balance between Qyality and Cost. Its never a business of low cost only. There are certain phases which cannot be done from Offshore without impacting quality, though it would save a lot of cost. (Eg. Business Blueprint in SAP implementation or Defining Global template in a roll out)
Hence CIOs should focus on selective outsourcing instead of Total Outsourcing

c) Governance – If my performance is proportional to someone’s action, I better watch him/her. In any outsourcing (large or small) key aspect is governance of the program. Its an investement one need to make very readily so that adherence to the objectives of the program are well communicated, tracked and measured. No Program can be successful without a solid governance mechanism in place

I would request if this and my previous post can be communicated to all audience/members here so that it may strike a more wide discussion and some wonderful ideas can enrich us.

regards,
- Sarvesh

First, would like to congratulate you in striking the topic of the moment.
I do not take part in making decision for any company about the questions you ask but I would like to highligh a few blocks which may trigger a decision either way.

Outsourcing has always been a double edge sword.It can give you direct cost benefits but not at the expense of your IT Stability, Independence and Integrety.Therefore it becomes very important to understand the difference between what we ‘want to’ and what we ‘can’ outsource.

In current economic circumstances, I see Outsourcing as a strategy pregnant with opportunites. It would help IT departments as follows :
A) Reduce the expense to revenue ratio
– Increase the revenue or value delivered by IT to business
B) Meet Business Expectations
– Increase reliability of systems
– Improve time to market
– Improve customer satisfaction
C) Improve Quality of service
– Continuous Improvement
– Technological agility
– Access to Industry Best Practices
D) Improve Flexibility and Scalability
– Provide agility to IT solutions
– Access to Large pool of resources for new projects
E) Reduce Fixed Cost
– Go for Dynamic cost of operations (eg. Per ticket AMS cost)
– Access to Global Delivery Models

If the above points helped you or any other reader in your decision making or in case you wish to enrich my comments, you all can mail me at sarveshlodha13@gmail.com

Thanks
- Sarvesh