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I don’t understand outsourcing

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What’s the deal with this? It seems to be all the rage and yet, I know of no one who has had a pleasant experience with the final product. Sure smaller companies can’t afford a F/T I.T. person but in the larger organizations you still see this movement and yet no one is happy with it. We can’t mention the ‘big 2’ by name though ask a cutomer (end user) about their experience and no one is impressed. The stories roll on, 3 weeks to replace a cd-rom drive, “out of scope” requires an addition to the contract, “not our responsibility”. Amazing is the people who work for them as well (yes we all need to work) though there is no internal training for upcoming product releases hence loyalty is at the minimum and for those that work late, time inlieu screws up your billable hours. Aside from the small office environment I can see more reason to keep it in house. With all the legislation coming to address the cyber world and privacy, it makes no sense to outsource. I’d fire a redundant ‘VP of anything’ and use all the ridiculous benefits to finance the I.T. dept. before I’d outsource my core business infrastructure. I’m not bitter, really, I just don’t get it, all the years upon years of horror stories from outsourcing.

Topic

CO$T$

In reply to I don’t understand outsourcing

The PRIMARY reason that big businesses are using out-sourcing is co$t.

First, over the past 30 years MANY services that used to be “in-house” have been successfully out-sourced.

Cleaning
Maintenance
Benefits
Payroll
Manufacturing

The benefit to the business is not just the reduction of payroll costs. The ever rising cost of benefits is a major factor.
Another factor, is that the company does not need to worry about unemployment insurance issues should they not need the out-sourced services.

Also, if they do not like the technician supplied by the firm, they can usually arrange for a different technician at no cost to them.
Try firing an employee after the first 6 months.

Another factor, is with computers being almosta household appliance, they have lost their mystique.
To the average VP, no special knowledge is needed to take care of a network.

Chas

Completly Agree.

In reply to CO$T$

Your are completly right when you say it comes down to cost. Outsourcing looks incredibly good on the books because all the “employment” costs like super, sick days ( see as an unpaid debt ), health benefits etc aren’t there.

In saying that, IMHO i believe that outsourcing looks good on the books only for the first 5 years or so. After that things like customer satisifation ( staff members ), response times etc start taking their toll. It only takes on C level person to have to wait for printer driver install or basic OS fix and you’ll see management seriously re-considering outsourcing.

Sums it up

In reply to CO$T$

All I can think of worth adding is to consider the source of complaints. If its the users, it is a legitimate concern. If it is the former IT team, double check the facts.

Outsourcing

In reply to Sums it up

I work for a firm that supplies technicians & engineers for its clients. Thing with outsourcing is that client has more control over outsourced staff. For example, when work needs to be done, they just say, what and until when. Everything else is upto us; we get our support not from our client but from own company. I have been observing the staff of our client. Their efficiency is well bellow their potential (at least I hope so:)) and still, they have nothing to worry about so far, job-wise. In case of my company, pressure is to be fully compliant with clients instructions and to please them. My company pays for all my technical training, takes care of replacement in case of sick leave or vacation… But this has its price. My counterpartemployed by client earns about the same as I, altough clients firm pays more than twice the amount for me as it does for him (his technical training included).

Yes staffing is the problem

In reply to Outsourcing

Interesting in the arguments about the human factor. I think as business needs and I.T. merge, the realization of companies to control your their destiny will become present. Staffing problems usually come from poor management / leadership.

Outsourcing

In reply to Yes staffing is the problem

Outsourcing it stupid to me, when you build a product and expect someone else to maintain it for you. When support techs cant exchange knowledge with the engineers who build it easily, then customer service goes down.

If a company hires some tech from another firm to be in house 40hrs a week. I dont see that as much of a problem. However ,in the long run, not sure if they save money. Since they are billed at high rates.

Overall picture

In reply to Outsourcing

You made a good point there, but there are other factors, that we need to take into consideration. Company that pays us for technicians had their own technical support staff and software development. Couple of years ago they decided to outsource everything, which proved to be an expen$ive, but also reliable solution. If backups get screwed, computers break down, servers have abnormal downtime, software works poorly, software is underdeveloped… they are covered by terms of contracts. If their own employee would do something stupid, they couldn’t ask him for reparations in 10’s of thousands of $ . They expect that from company and we’ve had cases, where our client got reparations in money becasue of mistakes, that would otherwise cost themdearly.

Reparations

In reply to Overall picture

I’m aware of some contracts having penalties and mistakes happening though in the true sense, I haven’t heard of that many payouts. I actually find the opposite in where the potential for blackout is so great that any enhancements to an outsourced system ( e.g. ERP Peoplesoft) is costed to such an extreme that it is decided to develop in house as a cheaper solution. Show me a company who have outsourced their ERP and I’ll find 10 shadow systems that could have been in the ERP package except the Outsourcers wqnted to much for development. Which goes back to my original argument i nthat everything is ‘billable hours’ and there is no inovation or R&D.

Outsourcing is always a

In reply to I don’t understand outsourcing

Finical descission from the accounting department and these people only look at the bottom line and cant understand the problems that may arrise. After all it’s cheeper to have someone else pay for all the training and other necssary things rather than do it your self but these same people are absoulty parinoid about data security which is comprimised when you bring in someone from outside the company.

Put simply the accountants want their cake and to eat it to which doesn’t happen but they are the ones who make the mistakes than pass the blame back to the IT department. About the only way to adress this problem is to instigate a data protection policy and and circulate it to all departments then when the accounting department wants to bring in outside assistance just draw their attention to your data security policy the same applies when they refuse to allow training in new platforms or whatever, it will not be a short term fix but will take time but eventually you will get some form of sanity in place and at the same time any security breaches can be blamed on the department responsible for bringing in outside people. This way you at least get to pass the blame back to where it belongs rather than carry the can for other peoples mistakes.

[Author]

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