Top Information Technology (IT) Outsourcing Mistakes
21/05/2021 - Outsourcing
Outsourcing is big business. Today you can outsource anything from payroll to marketing to HR to legal. And right there in the thick of things is Information Technology (IT) outsourcing. IT is often a prime candidate for outsourcing, whether you are talking about a specific function – such as a help desk – or the whole shebang.
In the 20 years I’ve been a business technologist, I’ve seen a lot when it comes to IT outsourcing. I’ve used outsourcing vendors to deliver internal projects, trained someone offshore to take over my job, and provided IT outsourcing services to my own clientele. And through it all, I’ve observed this: there are four major ways to majorly mess it all up. Here’s a free guide on how to do IT outsourcing – the WRONG way.
1. Focus on the numbers, not the strategic plan Crunch the numbers, but go no further if you want to ensure a real IT outsource mess. Assume the decision is purely budget-driven. All you should focus on is the financial savings you can show by hiring outsource personnel to do the same job for less.
The alternative (and the way to avoid a royal mess) is to examine whether IT outsourcing aligns with your long-term strategic plans, goals, and objectives. You might want to consider the factors suggested by the Outsourcing Institute. For example, will IT outsourcing:
- allow your company to focus on its core competencies
- access skillsets not employed internally
- free existing employees to work on strategic projects
- compensate for a shortage of personnel
- reduce time-to-market
- mitigate risk factors
As you can see, there’s a lot more at stake here than just dollars and cents.
2. Ignore all risks instead of mitigating them The second way to botch up IT outsourcing is to stick your fingers in your ears and say “I am not listening to you” when someone tries to raise concerns. Tell yourself that only pessimists who are afraid of change worry about things like loss of confidentiality, increased information security needs, loss of in-house expertise, potentially problematic quality of service, inconsistent performance, or squirrelly contractual language that might come back to bite you.
Of course, if you get to thinking that those concerns may represent valid risks, then it’s time to take some action. For example, you’ll need to vet a mutually beneficial contract (and that can take some serious engagement at the negotiation table), manage expectations, and streamline communications. And that’s just the beginning of the job. As the relationship unfolds, you’ll want to develop methods to measure the effectiveness of the services you receive and drive continuous improvement.
It’s certainly easier to put on pair of rose-colored glasses but, in the end, you’ll be glad you took a good, hard look at reality.
3. Look at your vendor invoice, not at your TCO Let’s go back to money for a moment. To guarantee a bad experience with IT outsourcing, be sure that you only use obvious cost factors – like the invoice your IT vendor sends you – in your number crunching. Refuse to take into effect the total cost of ownership (TCO), since lots of those items don’t come from your budget, anyway.
On the flip side, if you want to do IT outsourcing right, you’ll have a lot more line items on your financial spreadsheet, such as costs for:
- internal project management
- parallel system administration
- long-term system integration
- new hardware and software (i.e., due to legacy equipment or incompatibilities)
4. Tell people to shut up instead of speak up And the last way to totally throw off IT outsourcing? Tell people to pipe down when they gripe and complain about the change. Ignore the fact that they probably feel threatened, and penalize them when their productivity and engagement drops.
Or, you can actually manage the change for your people. Encourage them to speak up and express their concerns. Engage in dialogue where you explain the reasons for IT outsourcing and let them know how this is a benefit – for everyone involved. In short, keep their motivation high.
There you have it: four ways to majorly mess up IT outsourcing … or (even better) how to avoid a mess up. Outsourcing is here to stay: isn’t it worth the effort to do it right?
