Tag Archive: Outsourcing IT Services

  1. Outsourcing IT Services: Five Steps for Business Success

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    Outsourcing can bring tremendous benefits when properly used and understood fully well. Organizations outsourcing their business and IT processes shouldn’t expect the strategy to miraculously act as the ‘panacea’ but a bridge to help in their search for rare talent and access to innovation. This brings us to the bottomline of our story: outsourcing customers must pay attention to knowing the main principles of IT outsourcing.

    Organizations that outsource their information technology functions will continue to increase, according to The Computer Economics IT Outsourcing Statistics 2011/2012. From only 6.1% of total spending that went to service providers in 2009, the figures went up to 7.1% in 2010. The percentage of firms’ total IT spending to outsourcing is seen going up in 2012.

    Here are simple tips to make IT outsourcing a true success.

    Establish a clear goals. There is no shortcut to success. Make sure to share with your outsourcing partner the project goals and requirements. It will be of help for the service provider to understand your project goals if you provide all details of the project.

    Define scope and schedule of your project. What you want to reach with your project must be clearly articulated to your service provider. Normally, organizations set out a clear statement containing important information such as business and schedule requirements. Project cost can quickly spiral out of proportion if you do not provide a realistic and clear project scope and deadline.

    Choose provider which can offer value and quality. Some organizations rely too much on brand and price. High-price doesn’t always necessarily equate to quality nor low-price can yield more results. Most experienced mangers would tell you to research very carefully your provider and see if they can render both good value and quality output.

    Review portfolios and sample works. Sometime in the past, the outsourcing company may have already done a project similar to what you currently need. Look for these works and match them with your expectations for value and the approach of the provider in doing works. If you really want to make sure your prospective outsourcing provider knows or understands your needs, ask them to provide you with a draft of their work plan. But please respect that your contractor works for a living and their services are not given out free of charge so don’t request them to provide you with a completed work.

    Work with a compatible provider. As well as cultural compatibility, make sure your IT outsourcing’s employees are compatible with your organization’s culture, communications skills, experience and approach to work. Being compatible with your business partner is important because they will become part of your company.

    Of course all these five steps are not complete as there may still be more that you can use to gain from your outsourcing relationship with a contractor. Because as in other types of partnerships, your organization and your service provider will need to maintain mutual respect and respect.


  2. More Australian Firms Seen Outsourcing IT Works

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    “Outsourcing has officially arrived,” declares Forbes Magazine’s Eric Wagner.

    To believe or not his declaration, Wagner just couldn’t be more authoritative when it is Peter Drucker, the legendary management guru, he is referencing here. Drucker once envisioned a future (“Next Society”) where everything will be outsourced.

    The Next Society could already be happening now or in the coming years ahead. But still what’s certain, we’ll get there when we get there. To the uninitiated, Wagner introduces Drucker as “a man with a seriously keen eye for business” whose insights apply to all entrepreneurs everywhere.

    These Next Society’s corporations may have already arrived, particularly among Australia’s business sector. An ITNewcom survey of 60 executives at top IT spenders in Australia revealed some glowing insights about outsourcing.  There are now 75 per cent of organizations that are already outsourcing some of their software applications, while 85 per cent outsource some of their infrastructure.

    The outsourcing trend shows no sign of abating and will continue to increase in the forthcoming future. A benchmarking and sourcing consultant, ITNewcom further notes that 43 per cent of those interviewed express plans to outsource their software development services and 40 per cent intend to send to offshore vendors more of their infrastructure.

    Arrangements with their existing outsourcing provider are also likely to see massive changes within the next two years. Out of the total, there will only be 22 percent of the public sector organizations and 29 per cent of private organizations who will retain their current outsourcing mix, according to ITNewcom.

    There are 39 per cent of public sector agencies who are reportedly looking at outsourcing some of their application needs, according to ITNewcom.

    At the back of the growing popularity of outsourcing as a viable and logical part of IT operations by many in the industry, it also has received some bad raps and fierce public outcry that jobs are being migrated abroad. The source of much of the public reaction stemmed from the misconceptions and myth-making campaigns by some sectors who are opposed to outsourcing.

    Outsourcing is viewed by Australian business leaders as a path that could provide them many benefits. Among the three cited reasons why outsourcing is an attractive business proposition include the following: 1) access to resources not otherwise locally available, 2) cost reduction, and 3) ability to increase output on demand.

    Observers consider Australia with a mature information and communications technology market, where outsourcing comes as a smart business strategy to take. An analyst at Gartner finds outsourcing a growing trend than insourcing or bringing IT jobs back into the company. Given the general business climate of Australia, there are only very few large-scale moves to bring their IT responsibilities back in-house.

    Going back to insourcing is typically costly and a disruptive step. These alone prompts organizations not to hasten decisions to return back to inshoring as such move is not to be taken lightly. Not certainly an overwhelming strategy, insourcing does not work for some organizations.

    The move to return to insourcing are often the result an overhauling of organizational philosophy away from outsourcing. Some cited leadership change or the bad experience that some organizations have had with their outsourcing contract.