IT Outsourcing: Maximize Flexibility and Control

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IT Outsourcing Maximize Flexibility and Control

• Teja Phanidhar Kunju

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IT Outsourcing

• Outsourcing decisions depends on whether they are
  core strategic or commodity type and also what
  kind of benefits it brings to a company.
• Need to make a decision whether to outsource
  entire companys operations or a part of it for a
  longer or shorter length of time.
• Does the IT Operation provide Core Strategic or
  Commodity advantage?

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IT Operation

• If it is core strategic then it is kept in-house
  otherwise it is outsourced depending on the
  supplier.
• In majority of cases this approach leads to
  problems and disappointments.
• Managers cannot be certain about their markets,
  future technology and suppliers capabilities and
  motives.

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Outsourcing Approach

• The issue of whether an IT operations is
  strategic or commodity is secondary.
• The main objective of the company is to maximize
  flexibility and control so that the company can
  pursue other options.
• Selecting the IT operations and dividing and
  assigning them to different market providers was
  one of the options.

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Outsourcing Approach (Cont.d..)

• This approach makes it much less expensive to
  switch suppliers or to bring a service back
  in-house if a supplier proves to be
  disappointing.
• Managers of many organizations have embraced this
  approach but even they feel their way forward.
• No particular framework to replace the
  conventional approach which is flawed.

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Outsourcing Decisions

• There is a need to minimize the risks involved in
  outsourcing by paying attention to issues such as
  suppliers contracts, up-gradation and cost of
  technology, knowledge of ones IT services, users
  requirements, suppliers services in meeting
  demands, third party recommendations,
  communication among the management people and
  assessment of in-staff and suppliers cost.

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Conclusion

• The article discusses these issues with the help
  of a fictitious company Energen.
• Proper communication needs to be maintained among
  the overall hierarchy of company management.
• A third party assessment is needed for the
  continuous growth of the company.
• The role of the managers is not properly
  discussed.