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IT Outsourcing

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					IT Outsourcing Management

      Dr. Kishen Iyengar
          What is Outsourcing?
• Outsourcing is the transfer of ownership and
  responsibility of a functionality from a firm to
  an other legal entity.
• Outsourcing has been around for decades,
  especially in non-core activities.
• IT outsourcing to firms based in other
  countries is referred to as offshoring; If the
  provider is in the same country it is called
  onshore outsourcing
              IT Outsourcing
Where American and European Companies source from
(source – Weissman Center)
India                       90%
Philippines                 17%
Central/South America       13%
China                       9%
Singapore                   9%
Ireland                     5%
Eastern Europe              4%
         Benefits of Outsourcing
• Cost Benefits – lower manpower costs, reduced
  capital costs, on-demand teams
• Business and Organizational Benefits – faster time
  to market, risk migration, ability to focus on core
  competencies, improved processes

IT outsourcing may involve any activity in the IT
   organization including routine processes like
   desktop support, hardware and network
   maintenance, or complex functions such as
   implementation of ERP
Outsourcing Process
     Questions in the IT Outsourcing
                 Process
1. What function do I need to outsource?
2. What are the risks involved?
3. Who do I outsource to?
4. What are the terms of the outsourcing
   contract?
5. How to decide if the outsourcing contract is a
   success, Did it meet expecations?
6. Should I renew the contract?
    What functions to Outsource?
• Require minimal client or end-user interaction
• Have mature features and stable well defined
  requirements
• The process is standardized, repetitive, well segmented
  and documented
• Do not involve secure or sensitive data
• Large enough to produce substantial benefits
• Low added value or labor intensive
• The application/process is stable with a reasonable
  expected life time
• Low operational complexity
• Low to medium business criticality
                    Risks?
•   Country
•   Criticality
•   Employee motivation
•   Others?

After risks are considered, you may invite other
  parties to submit their proposals by issuing an
  RFP
        Who to Outsource to?
• When you are deciding between multiple
  vendors, you may want to look at certain
  aspects of each vendor to help you decide.
• Reputation
• Management
• Markets and Clients
• Staff
• Technology and Process
              Reputation
•   The reputation of our company is very good

•   We have a detailed, written business plan
•   Our business plan is extensively used as a management
    tool
•   We have a high priority to export our services
•   Everyone in our company knows our priority to export
    our services
•   We help each other within our company (also between
    departments)
•   We believe in professionalism and commitment
          Management
•The top management has a high level of technology
understanding

•The management is willing to change
•We have a professional management team
•The management is highly motivated
•The management provides leadership
•The management is focused
•Our management has an open style
    Markets and Clients
•We have a strong client base in the US
•We know the EU market very well
•We have a professional marketing team
•We have a well defined and clearly communicated selling
proposition
•We have capacity to carry out projects for foreign clients
•We have professional printed marketing material
•We have a professionally designed web site
•Our clients are highly satisfied with our services
•We have a strong reference list
•We know that we are very price competitive
                        Staff
•Our company has a strong technical staff
•Our staff is highly motivated
•Most of our people are certified (Microsoft, Cisco, Linux,
etc)

•Our company offers an extensive employment benefit
package
•Our staff participates in training regularly
•Our staff selection process is formal and well documented
•We evaluate our staff regularly
•Our staff evaluation process is formal and well
documented
•We maintain a less than 10% annual staff turnover
Technology and Process
 •We have several R&D programs running in our company
 •We add new technologies to our technology portfolio
 regularly
 •We have a fully defined and documented software
 engineering process
 •We have a fully defined and documented project
 management process
 •We have a fully defined and documented QA process
 •We handle requirements changes very flexibly
 •We master requirement engineering practices
 •We plan all of our projects in great detail
 •We have a web based project monitoring system
 •We have a formal quality certification (CMM, ISO, etc)
 •We constantly improve quality assurance and key
 processes
 •Our on-site security is up-to-date

				
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