Insights for Companies Considering Outsourcing Their IT Operations (DOC) by hardley12


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									Insights for Companies Considering Outsourcing Their IT Operations

No matter what the rest of the world continues to do in the year 2012, business leaders will
most likely be challenged to find new and better ways to optimize their business operations.
Many of them facing challenges such as meeting revenue pressures will look forward to
establish cost-effective processes while those looking to focus on core competencies can
consider tying with other firms that can handle their non-core functions.

IT outsourcing has proved itself as an effective business strategy that can address most of
the challenges faced by organizations today. Companies can simply outsource their IT
operations to IT firms and get things done at a fraction of cost of in-house expenses. This
will not only help them meet revenue pressures but will also improve quality of their service
while allowing them to focus on their core business.

However, outsourcing is not a panacea and can actually make things worse if not handled
carefully and executed properly. Companies chewing over outsourcing, whether creating a
new outsourcing relationship or expanding their existing one, need to take into account a
few important practical considerations prior to negotiating the outsourcing agreement. Here
is a list of outsourcing checklist that you should assess before selecting a partner:

                                                   Result Oriented vs. Process Oriented
                                                    Outsourcing: What’s on your mind;
                                                    whether you want to focus on achieving
                                                    certain outcomes or are specific how IT
                                                    service provider carries out the process?
                                                    You might be looking for both but the
                                                    decision depends on the time, scope and
                                                    deliverables of a particular project. If it’s
                                                    an ongoing process, you might be more
                                                    concerned about the process. For short
                                                    term       projects,       of       course,
                                                    deliverables/results matter the most.
                                                    Whatever your decision is, it will have its
                                                    impact on your outsourcing approach.

      Create an Agenda: Having clear-cut and well-defined business and technical
       requirements before looking for an outsourcing IT service provider plays a vital role.
       Make sure that you are completely unambiguous about what is required.
      Decide on the Evaluation Approach: Before you target any outsourcing company
       and start assessing the proposals, determine the evaluation criteria keeping in mind
       the overall objective of outsourcing initiative. Try to strike a balance between cost
       and quality without any bias.

      Selection of a Service Provider: Your outsourcing success depends on experience,
       technical expertise and capability of the IT firm which you are going to collaborate
       with. It is, therefore, essential to select a service provider on the basis of their
       experience and expertise.

      Outsourcing Team: The quality of work is very much dependent on the quality of
       resources working on your project. Check with your service provider beforehand how
       IT personnel for your work will be hired. Their qualification, experience, technical
       competence, communication skills and ability to deliver solutions will affect your
       project development process. The quality of key resources should be taken into
       account before hiring them.

      Transition Costs: Why do you want to outsource your IT functions? Cost-
       effectiveness is one of the biggest reasons. The cost of outsourcing your business
       functions should always be conservative otherwise the whole purpose of it is
       defeated. You should be able to save around 40-50 percent over your internal
       development cost.

      Plan for a Smooth Transition: A smooth transition of IT operations requires a
       careful coordination of countless of small and big interdependent activities. Engage
       experienced transition management personnel and ensure that it happens in a way
       as intended.

Undoubtedly, IT outsourcing is the answer to many of the challenges that companies are
facing in today’s highly volatile business environment. But it calls for the need of careful
establishment and management of outsourcing relationships and proper execution of

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