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Has outsourcing worked for you?

By Toni Bowers ·
Has your company outsourced some or all of its MIS duties? If you have, we'd like to know how it has worked out. Are you where you'd hoped to be today? Where do you hope to be in the near future? Has using an outsourced vendor caused any problems in meeting business objectives? Please respond to this thread and let us know.

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I could be at both ends of the outsourcing

by stargazerr In reply to Has outsourcing worked fo ...

I am an Indian and there is a lot of outsourcing to India ....

But I am in UK now and my company outsources some of the development work ... Seems to think that we have enough to be getting along with.

I agree - But since I am hoping to go from support into development, I am not happy with this.

]:)

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it depends

by herbert_mendoza In reply to Has outsourcing worked fo ...

IT outsourcing is good but it depends on the kind of work..it should be properly assessed in terms of financial impact and business process..you know, sometimes outsourcing is a tied-up arrangement with the outsourced company if it fails, implications will be the end results..which i think not a win-win solutions.

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it depends

by herbert_mendoza In reply to Has outsourcing worked fo ...

IT outsourcing is good but it depends on the kind of work..it should be properly assessed in terms of financial impact and business process..you know, sometimes outsourcing is a tied-up arrangement with the outsourced company if it fails, implications will be the end results..which i think not a win-win solutions.

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Outsourcing is a con..

by charles In reply to Has outsourcing worked fo ...

As a company to whom work is outsourced, I don't mind. - Its money in my bank. BUT to my clients, I regard it as an expensive confidence trick. Instead of having work done in-house by wages staff, I pay MY staff wages and add a profit margin and administrative costs. The client has to wait until I can slot them in. Their priorities are not mine.
The clients have lost their in-house skill base and knowledge base. They are then open to rip-off merchants who can keep jacking up the price for a substandard service. Most board members would not have a clue about what is fair and reasonable for IT services. Any spin-offs are the property of the outsourcee.
Outsourcing is short term gain for long term pain.

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Most times yes

by pmoleski In reply to Has outsourcing worked fo ...

We operate a mixed shop with some things outsourced and some things in-house.

The outsourcing arrangements range from short-term contracted programmers to long term deals that have ran for over ten years. In the most extreme case we have one key application where both the software development/support and the operations is fully outsourced. In general the outsourcing arrangements have been successful for us. We have had to replace individuals under contract who did not perform up to expectation.

Things that I would not outsource include the requirements definition, testing and user training, and over all business area leadership/project ownership. Ideally these should be coming from the business areas and need to be there whether the IT functions are done in house or outsourced.

We outsource to supplement internal resources for large one-time projects that cannot be accommodated in the internal resource base. We also outsource if the technology is something that we do not have a critical mass to support in house. It is risky to be in a situation where one key person leaving puts a whole business area at risk.

The other reason some organizations outsource is that there can be limitations on the number of internal staff that can be hired, leaving outsourcing the only option when funds for a project become available.

A few cautions about outsourcing if you want to be in it for the long term.

1) If the vender does not make any money or worse loses money on the deal it will likely fail in the long term. Stability of supplier is important, as one of the key reasons to outsource is for stability where a critical mass cannot be sustained economically in house.

2) The project structure in a business area to be successful working on an IT project with an in-house team also needs to be there to work with an outsourced technical team. If the business area/project will fail with a disciplined internal team it will also fail with an external team and it will cost the organization a lot more money. Outsourcing will not save a project that is doomed because of lack of support in a business area. However, if an outsourcer can impose discipline/methodology that is not acceptable when proposed by an internal team then they may have a better chance at success. It depends a lot on the culture of the organization.

The models of off shore outsourcing and Internet hosted services (old concept, new name) are changing the economic analysis but rule remains the same. The outsourcing has to give your business something you cannot do internally to meet a short/long term business need or there is no reason to do it. In the longer run I do not personally believe that money is saved from outsourcing if your internal staff stays current and single-mindedly pursues improvement in total cost of owner across all areas of IT. The one caveat being where critical mass is too expensive to develop in house for the value of the function needed (EX: mainframe operations).

Phil

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Outsourcing traps experienced

by agastgif In reply to Has outsourcing worked fo ...

I'm a divisional IS manager in an organisation that entered a global outsourcing (OS) deal some years ago. I'm one of the "retained" souls that ended up buying services from my ex-colleauges... I have very little positive to say.

The major drawbacks are these:

- When you have a problem, you talk to anonymous Help Desk (HD) agents, not "persons" who know who you are and thus know what you want and what to do! They just log the case and route it to a case resolver. You thus immediately loose control of what's going on! Cross your fingers and pray!
-Because the Service Provider (SP) focuses on his SLA's and internal costs, you loose, flexibility, service speed, quality and control on what is going on. Your only way to track cases, is asking the person who has the probem!
-No control of priorities. The SP does what he thinks is most feasible within the SLA.
-When your own organisation hits performance problems, you'll get "shot". An you may not even know why!
-SLA's are never agreed so that there is a true way of forcing the SP to perform. OK - they may agree to some refunds after months of arguing, but you loose more than they do!
- CustSat survays MUST have an option to give free text comments. The score tells you nothing. The comments do!
-Developmnet of services should always be based on mutual interest. The SP cannot "offshore" his services UNLESS the SLA level gets better without hickups! We experienced SP:s offshoring and it was catastrophic for at least 2 years! On the third year it is getting close to where we were!. And we pay the same service fees!
-When you give network control to a SP, network problems will hit you! There is never a proof of some component malfunctioning - your people just cannot log in! And by the time you made the escalation call, all is back to normal. Lots of proof that it never happened.
-We have not seen costs going down. On the other hand we do not know how much higher they would be today with own resources. Probably less cost totally but at the sacricice of agility, flexibilty, customer satisfaction and development speed.

Tip 1: Demand that the service provider's service manager relocates to your office! If he is sitting in the same office as you are, the backoffice guys will get alerts much faster.

Tip2: Have the follow-up meetings in your own office. And walk the SP attendees through the premises and have them talking to your people before meetings!

Tip3: Demand access to the SP:s case ticketing system. This enables you to track what's going on in "near real-time"

Positive:
-There is no doubt that the SP has a larger and more competent workforce that you ever would have!
-Someone else assignes the tasks and follows that they are closed ( though you have to check that they have been done satisfatory)!
- You do not have to wake ut at 6 AM on sundays to check if the AD is still running...


Potential:
IF the SP is committed to reaching a win-win situation and does not only focus on SLA and internal costs, there is a bright future for both!

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