Outsourcing - BPO
Strategic Outsourcing: Testing the Outsourcing Waters and Staying
Afloat
Before Gertrude Ederle began her historic swim off of Cape Griz-Nez,
France, she underwent extensive training for endurance and technique—even
though she was already an accomplished record-breaking swimmer
with Olympic medals to her name. Outsourcing IT may not garner
the same attention as being the first woman to swim the English
Channel, but it is no less important to gather as much experience
and knowledge as possible on a small scale before diving in for
the big swim.
The trend toward IT outsourcing is increasing dramatically. According
to a report by Foote Partners, as much as 45% of North American
IT work will be outsourced by 2005. And there are good reasons
behind this trend. Bruce Caldwell, principal Gartner analyst believes
companies can generate 20-30% savings through outsourcing. This
substantial savings potential isn't easily overlooked, yet it
isn't the number one reason companies are choosing to outsource
right now. In a recent survey by The Outsourcing Institute, the
primary reason behind outsourcing is to improve company focus.
Other motives include freeing up internal resources, accessing
top-notch capabilities, and accelerating time to market. The survey
also indicated that 55% of firms who outsource do so within IT—more
than any other area.
As more companies begin outsourcing some or all of their IT function,
it becomes difficult to ignore the competitive pressure. With
competitors achieving their IT needs at 20-30% less cost, and
getting ahead in the market because of increased focus within
the company, those who ignore the outsourcing trend could potentially
lose ground very quickly.
At the same time, outsourcing horror stories abound. According
to Gartner research firm, half of the current outsourcing projects
will not meet the company's expectations and will be considered
failures. While the vast majority of these failures are only minor
disappointments where the company decides to outsource to another
vendor, certainly a few are major catastrophes. An anonymous case
study in IT Metrics Strategies discusses a CIO who chose to outsource
to beat competitors to market. The outsourcer had promised to
meet a deadline his staff had said was impossible. When the outsourcer
failed, the CIO couldn't rebuild his team fast enough to finish
the job. In the end, the product never got to market at all.
So how do you secure all the benefits of this outsourcing wave
without getting dragged into the undertow? The key is strategic,
selective outsourcing. According to Corey Ferengul, VP of the
IT research firm META Group, an increasing number of companies
are choosing to outsource non-core IT tasks. Common responsibilities
going to third-party providers include Web hosting, call centers,
data storage, and database administration.
"There's a learning curve and a life cycle to outsourcing,"
said Caldwell, "and it can be expensive finding the right
vendor, as well as going through the transitions of taking your
operations to that vendor." Stable, yet customizable IT functions
provide an excellent training ground for outsourcing. Any function
with known benchmarks for performance and results, as well as
available, reliable outsourcing partners is a good place to start.
Ultimately you may want to outsource your entire IT department,
but first you need to get a handle on managing an outsourced process.
Some companies may discover they don't need to incur the risks
and organizational chaos of switching to total IT outsourcing.
By nimbly carving out and outsourcing small pieces of the IT function
that deliver the most cost and quality benefit, companies may
find they are already receiving maximum savings at minimal risk.
However, they will have done some carefully planned and executed
experimentation before making that decision.
Gertrude Ederle once said of the sea "I never feel alone
when I'm out there." The channel became her ally as she swam
her way to England in record time. By starting on a small, strategic
scale, you'll turn IT outsourcing into your ally rather than a
cold, tumultuous, foreboding sea.
Jenne Wason
Jenne works for The Pythian Group, a leading database management
firm.
Article Source: http://EzineArticles.com/
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