IT outsourcing can be a strategic move for your business, but it also comes with challenges and risks. How do you ensure that you get the best value, quality, and performance from your outsourcing partners? How do you align your IT outsourcing goals with your business objectives and vision? In this article, we will explore some of the key aspects of setting and achieving your IT outsourcing goals.
Before you start looking for IT outsourcing vendors, you need to have a clear understanding of your current and future IT needs. What are the main problems or gaps that you want to solve or fill with outsourcing? What are the specific tasks, functions, or projects that you want to outsource? How do they relate to your core competencies and competitive advantages? What are the expected outcomes and benefits of outsourcing? How will you measure and evaluate them? By answering these questions, you can define your scope, budget, timeline, and quality standards for your IT outsourcing goals.
A few years ago, we collaborated with an e-commerce startup. Before contacting us, they precisely identified their IT challenges and future aspirations. Recognizing their strength was product curation and not tech, outsourcing was their go-to. They approached us with a clear scope and timeline. We delivered tailored solutions, ensuring a seamless integration and timely project execution. This partnership showcased the power of clear pre-planning in IT outsourcing.
I think assessing your needs must reach beyond IT - you need to consider how the functional groups impacted by a decision to outsource may react; you may also need to consider if existing employees will be impacted which can have implications to HR, PR and other groups; you need to consider what the financial implications may be, for example treatment of an asset vs expense.
IT outsourcing can take different forms depending on your needs, preferences, and resources. You can choose from various models, such as staff augmentation, project-based outsourcing, managed services, or cloud services. Each model has its own advantages and disadvantages, and you need to weigh them carefully. For example, staff augmentation gives you more control and flexibility, but it also requires more management and coordination. Project-based outsourcing allows you to focus on your core business, but it also depends on the vendor's expertise and reliability. Managed services offer you a comprehensive and proactive solution, but they also entail a long-term commitment and higher costs. Cloud services provide you with scalability and accessibility, but they also pose security and compliance issues.
In many cases company's can have all models working at the same time and even on the same project. When you have project that plans on leveraging a managed service that is cloud based and engaging an integrator to connect various systems together, you may also need additional staff to manage the program, address change management and communications. When the projects are complicated, having a firm grasp of the various risks and mitigation plans as well as an overall strategy for how the groups will work together and when contracting efforts have to be in place is critical.
Once you have decided on your IT outsourcing model, you need to find the right vendor that can meet your expectations and requirements. This is not an easy task, as there are many factors to consider, such as the vendor's reputation, experience, portfolio, skills, technology, communication, culture, and pricing. You need to conduct a thorough research and due diligence on potential vendors, and compare them based on your criteria and priorities. You also need to establish a clear and transparent contract that defines the scope, deliverables, milestones, payments, responsibilities, risks, and dispute resolution mechanisms.
As I mentioned in many cases, projects will have multiple models and it is important for all the players to understand how they will work together even though you will contract individually with each party. It is also possible that the various vendors may be engaged by or sponsored by different internal groups so I recommend having someone who oversees all the engagement models/contracting efforts so that there is alignment and cohesion in expectations/deliverables/timing, and fee structures
After you have selected your IT outsourcing vendor, you need to maintain a healthy and productive relationship with them. This involves regular communication, feedback, monitoring, and collaboration. You need to set clear and realistic expectations, goals, and metrics for both parties, and track their progress and performance. You also need to provide constructive feedback, suggestions, and recognition to your vendor, and listen to their concerns and challenges. You also need to foster a culture of trust, respect, and mutual understanding, and avoid micromanaging or interfering with your vendor's work.
I agree that managing the relationship(s) is critical. It is almost inevitable that there will be some misses or disputes along the way especially if multiple vendors/technologies are involved. Establishing a solid governance approach with good program/project management that is applied consistently and appropriately to all parties (including internal stakeholders) will help ensure greater success of the project.
Clear Communication plays a very important role at every level. Sometimes the person co-ordinating onsite understands the client needs. Communicating the same to the offshore team is frustrated as the offshore team does not understand probably due to the lack of the wider perspective or it is lost in communicating to the others on the team and hence not getting the results which they are expecting.
Finally, you need to review your IT outsourcing results and evaluate their impact on your business. You need to measure and analyze the outcomes and benefits of outsourcing, such as cost savings, quality improvement, efficiency enhancement, innovation generation, or customer satisfaction. You also need to identify and address any issues or problems that arose during the outsourcing process, such as delays, errors, conflicts, or misunderstandings. You also need to solicit and incorporate feedback from your internal and external stakeholders, such as your employees, customers, partners, or regulators. You also need to learn from your experience and apply the lessons and best practices for your future IT outsourcing goals.
While I think reviewing results is important, this is hard to do in a timely and honest manner such that the lessons learned can be applied to future projects. Perhaps consider doing reviews/assessments throughout the project and having a deliberate plan/approach for how those lessons learned can be applied and benefit the next project.
First decide the need followed by make vs buy decision. Mostly the goal is business value delivered at a competitive price as an outsourcing goal. unique capabilities which gives an edge to company not considered for outsourcing rather team built inside the organisation.