CXO

Members discuss the pros and cons of outsourcing

Outsourcing promises cost savings and administrative efficiencies, but most participants in a Technical Q&A said it's no substitute for having a well-trained staff in-house.


TechRepublic member tropicalmask started a Technical Q&A on a topic that’s on the minds of many IT managers: "To outsource or not to outsource?" Tropicalmask asked for other members’ opinions on the advantages of outsourcing and if they see the trend toward outsourcing as good for the industry. The participants tended to have a cautious view.

The home court advantage
Anna777 wrote that she couldn’t answer the question of whether the trend toward outsourcing is good or bad for the industry, but she did share her perspective on the advantages and disadvantages of outsourcing.

In her view, a major downside to outsourcing a role is the risk of having someone new in the position every month. Such high turnover in the position may mean that people rarely stay long enough to become familiar with the system. In those cases, it’s unlikely that an outsourced employee would ever be able to predict how your company’s IT services may need to grow.

In contrast, a good in-house IT staff should be able to predict and prioritize your company’s needs. However, Anna wrote, “If your staff does not meet your standards, then by all means, find a company who can.”

What’s outsourcing going to cost?
For a closer look at the financial aspects of outsourcing, Anna777 suggested that tropicalmask check out an earlier Technical Q&A on what you can expect to pay for outsourced help desk support.

Outsourcing won’t overcome bad management
According to TechRepublic member jereg, companies too often turn to outsourcing as a way to solve the wrong kinds of problems. “If the problems are from bad management,” jereg wrote, “outsourcing won’t help.” He worked for a company that turned to outsourcing when the real problem was poor management, which had led to bad hiring decisions, inadequate training, and chronic understaffing.

A threat to staff morale
The company jereg worked for ended up hiring outside workers on long-term contracts for various IT tasks. “Most of these people had limited skills but were hired at salaries as much as double what the current staff got,” jereg wrote. That’s definitely a morale-buster. The two remaining employees in the network department quit, leaving the company with new hires and no long-term experience with the network.

Outsourcing has the potential to really hurt the people in your organization in another way—“unless you take the steps to make sure that your people come out ‘whole’ in the process,” diabetic wrote. He was particularly concerned about cases in which an IT department contracts with an outside vendor that hires some of the department’s former staff members to do essentially the same job. The question is, how will the vendor treat your former employees? “Sure, the companies that offer outsourcing will promise you the moon and the stars (and some can actually deliver), but make sure that they do not do it on the backs of your former employees,” diabetic wrote.

On the plus side
Although he doesn’t think it’s appropriate to turn to outsourcing to solve bad management, jereg believes that outsourcing can be a good solution in other cases. “I outsource some work when I need to do something that’s outside my area of expertise,” jereg wrote. “I know some good consultants and can get more done by hiring one for a day or two than by fumbling around.”

Stan also believes outsourcing has its place: “It depends on what you contract. The best things are help desk, project development, and security if you are Web-enabled.”

“You save a lot of money over the long haul,” Stan wrote, “plus you can get senior people for less that you would have to pay juniors.” On the question of whether the trend is good for the industry, Stan wrote that if it keeps all IT people employed, it’s a win-win situation: “You get the best for less, and the others find work elsewhere.”

Before you sign
If you decide to contract for outsourcing services, Stan offers this piece of advice: “Just make sure you control all source code—period.”

Anna777 also has advice for IT managers who are seriously considering contracting with an outside vendor: “If you decide to outsource, I'd recommend that you meet with the person they intend to send. Find out what they think about their company. Find out if they’re satisfied. She adds that, if everything seems to be okay, “then make sure the contract specifies absolutely everything you expect from the person/people they send.”

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