By Ellie Duncan, SupplyChinaDigital
Outsourcing internal IT functions is an emerging trend following the economic crisis
The outsourcing of IT operations has emerged as a growing trend amongst public and private sector companies globally. As with the outsourcing of any operation, both businesses and clients can benefit from outsourced IT services. However, there are also pitfalls that any company considering this approach should be aware of and try to avoid if possible.
One of the reasons for this increase in IT outsourcing is the financial constraints that have been placed on organizations during the economic downturn. Undoubtedly, large and small businesses all over the world are looking for ways to cut costs. Outsourcing, therefore, can provide a means by which to provide the same level of service — or even improved service levels — while keeping costs down.
WEIGHING THE OPTIONS
Neil Stephenson, CEO of Onyx Group, the specialist business and IT solutions provider, believes that organizations of all structures and sizes are increasingly recognizing the benefits of IT outsourcing and turning to this model to provide their IT needs.
“In-house IT management is complicated, time consuming and requires the finance, resource and capacity that businesses, especially following the recession, simply don’t have — something which is not set to change any time soon,” Stephenson explains.
Removing such a function from within a company can free up time and budget, which can then be channelled into the core areas of the business. It is vital though that before this decision is taken, all the risks and alternatives are weighed up.
Iain Monaghan, partner and outsourcing expert of law firm Pinsent Masons, highlighted the importance of planning in the outsourcing of any operation in his report, ‘Developing Outsourcing Strategies’ (September 2009). Monaghan outlined the factors that should be addressed prior to taking the decision to outsource.
Among those is assessing the risks and considering the alternatives. The two, of course, are linked as, in weighing up the alternatives to outsourcing, you are also likely to be weighing up the risks involved.
“Some organizations looking to outsource give their existing in-house departments the opportunity to put forward a competing bid, while others conclude that the benefits available from outsourcing could be obtained more economically by changes in internal processes; for example, increased standardization,” says Monaghan. He adds that an organization needs to understand fully the internal function that is to be outsourced before going ahead, citing IT as an example.
“Several studies of projects in the public and private sectors have shown the danger of trying to implement an ambitious new IT system when the users who are to operate that system are not organized in the way that was assumed by its designers,” he explains.
