Outsourcing an IT function? Ensure the dollars make sense
June 30, 2016
Many of today’s businesses have taken to outsourcing various IT functions. The goal of doing so is usually to save money. But rushing into such an arrangement could mean losing money on the project itself while diminishing employee morale and even compromising your reputation. Here are a few best practices to follow to help ensure the dollars make sense.
Ask the users
Elicit feedback from your staff and let them help you refine your approach to outsourcing. Ask for candid feedback about whether your company’s technology is really meeting their needs.
Also try to gather “lessons learned” from other businesses that have outsourced. How did outsourcing help them? What went wrong? To find such companies, ask your professional advisors or contact a relevant trade association.
Weigh benefits vs. risks
Look at your in-house capabilities and rank your ability to deliver every service your users require. If you’re coming up short on some of them, maybe an outside vendor could do a better job — and, in doing so, help your employees do their jobs better.
But consider risks as well. Generally, you should outsource innovation-based work only to accommodate peak demands or when you absolutely lack expertise. And even then, ensure knowledge transfer and retain control over vital tasks such as program management and client contact.
Be committed and disciplined
If you decide to go forward with IT outsourcing, develop a plan that includes objectives such as:
- An aggressive, integrated pilot program,
- Strategically selected offshore locations,
- Multiple supplier bids to ensure better competition and lower risks,
- Performance-measuring metrics, and
- A communications strategy to keep everyone involved informed and motivated.
Remember, it’s not enough to budget for only the monetary expense of IT outsourcing. You’ve got to plan to manage the relationship as well.
Manage it wisely
In many industries, outsourcing has become a competitive necessity. But that doesn’t mean you can’t manage it wisely from a financial perspective. Please contact us for help assessing and executing your next IT outsourcing arrangement.