Thursday, May 11, 2006

Outsourcing: Rationale, Criteria, Concerns, Challenges, Lessons Learned

Diamondcluster did a study on the Global IT Outsourcing, here are the highlights:

Top 3 Outsourcing Rationale
1. Reduce or Control Cost
2. Better Manage Variable Capacity Needs
3. Free Up Internal Resources for more Critical Purposes

Top 3 Key Selection Criteria
1. Technology Expertise
2. Cost
3. Flexibility in Structuring Operating Model (offshore, onshore, ...)

Top 3 Outsourcing Areas
1. Application Maintenance and Support (rising)
2. Application Development (declining)
3. Help Desk (flat evolution)

Top 3 Primary Concerns
1. More Management Complexity
2. Reduced Effectiviness (communication overhead)
3. Lower Quality of Output

Top 5 Challenges with Providers
1. Delays in Issue Resolution
2. Slippage of Project Deadlines
3. Inadequate Work Estimate Capabilities
4. Inadequate Skill Proficiency and Experience
5. Conflicting Communication Styles

10 Lessons learned
1. Cost savings alone is not a good reason to outsource.
2. Leverage resources with experience and skills in outsourcing to help
you develop your own sourcing strategies and execution roadmaps.
3. Clearly define your goals, measurement metrics and exit strategies up front.
4. Well-defined governance structures and proactive management and
communication are the keys to success.
5. Structure your vendor relationships as win/win propositions.
6. Outsourcing your problems won’t solve them. You should fix potential
problems first before you hand over the process to someone else.
7. Establishing very specific and measurable SLAs is crucial for evaluating performance.
8. Give providers a chance to be successful. Transitions take time.
9. Due diligence on providers is essential if you want to avoid surprises.
10. Internal resistance to outsourcing can be managed but you have to
foster proactive and candid communications to succeed.

Outsourcing is always harder than you originally thought.

For the complete report see 2005 Global IT Outsourcing Study.


Anonymous Anonymous said...

I came across your blog recently as I was doing some research on software outsourcing. I had
a few questions and was wondering what would be the best way to get in contact with you to discuss a few of them?


Friday, February 22, 2008 6:02:00 PM  
Anonymous software development said...

Quite lucrative blog...many outsoursing terms have been mentioned in it...i would like to see more posts explaning these from you...hope to read from you soon.

Wednesday, May 07, 2008 6:40:00 PM  
Anonymous Outsourcing Expert said...

outsourcing software development has been instrumental in the bridging of the distances between the IT worlds of the different countries and bringing them together in the platform of the global IT world.

Saturday, June 21, 2008 10:47:00 AM  
Anonymous ecommercewebmaster12 said...

As soon as you set up your online business, you would definitely come across the challenge of surviving in a quickly growing competitive environment. Moreover, the ever-changing market trends would also pose challenges to you and at such a situation, efficient ecommerce solution may provide you the best business advantage that you can ever dream of. Come in touch with and avail of the best ecommerce solutions.

Friday, October 10, 2008 11:19:00 AM  
Blogger DocuMaker said...

New resource on the subject: Outsourcing Through Rentacoder explains the proper way to outsource online before making mistakes via trial and error.

Tuesday, October 20, 2009 3:41:00 PM  
Blogger Rajesh said...

Nice post on Outsourcing.
Work from home India

Monday, December 07, 2009 6:39:00 AM  
Blogger jerry said...

This comment has been removed by a blog administrator.

Friday, June 04, 2010 11:33:00 AM  
Anonymous Accounting Dissertation said...

it's good to see this information in your post, i was looking the same but there was not any proper resource, thanx now i have the link which i was looking for my research.

Accounting Dissertation Proposal

Saturday, June 26, 2010 6:45:00 PM  
Anonymous Anonymous said...

Ronny, that's a very extensive discussion of the goods and harms of outsourcing. Although it is a trend in the global market, I agree that companies should be cautious in selecting the functions that they would transfer to an outsource provider. Proper discernment can help them in putting the company on track.

Strategically, auxiliary functions like book keeping and tax concerns are the ones that are passed to a payroll service company. Such functions, often takes time and manpower. So the best way to efficiently resolve this problem is to partner with another company that already has the expertise for fiscal concerns.

Very informative post. Thanks!

Tuesday, August 17, 2010 8:36:00 AM  
Anonymous Anonymous said...

nice post!

Thursday, October 28, 2010 3:14:00 AM  
Blogger Belle said...

Outsourcing is a crucial strategy for the business, but with great planning a company can outdo their competition. Outsourcing comes with high technology that makes the matters flow swiftly and effectively for small business. Payroll service as part of the system softwares are safely kept from dishonest behaviors. With this system payroll Nevada has accurate accounting records as a reference for tax payments.

Thursday, October 28, 2010 4:51:00 AM  
Anonymous IT outsourcing services said...

It is a very good scheme learning to outsourcing and i this will be help full also, thanks for sharing this post.

Wednesday, November 24, 2010 12:52:00 PM  
Anonymous dum maro dum 2011 download said...

really like your article.. i must say u have wonderful skills

Monday, May 23, 2011 12:27:00 PM  
Anonymous website designer oman said...

Its good to see such a great blog on your site.I really enjoyed reading your blog.

Thursday, June 02, 2011 11:54:00 AM  
Anonymous Best outsourcing websites said...

I love this post..We're providing the best outsourcing services in India..
We are into this outsourcing business for the past 7 years with approved 1350 plus LIVE sites from our development centre for our clients all over the world. We challenge, every 1 of 2 outsourcing clients will return back to us for more business with more gain. We have 125 developers who have constantly worked and having 7 years experience in the field of Joomla,drupal,wordpress and Magento.

Tuesday, June 21, 2011 3:06:00 PM  
Anonymous commercial playground equipment said...

Outsourcing is the act of one company contracting with another company to provide services that might otherwise be performed by in-house employees. Often the tasks that are outsourced could be performed by the company itself, but in many cases there are financial advantages that come from outsourcing.

Monday, October 03, 2011 9:43:00 AM  
Anonymous software outsourcing services said...

You made some decent points there. I looked on the internet for the issue and found most individuals will go along with with your blog.

Wednesday, March 14, 2012 7:29:00 AM  
Anonymous Norman Guzman said...

It is a pattern in the international market, I believe the fact that companies should be careful in choosing the features that they would exchange to an delegate company.

Monday, February 25, 2013 6:25:00 AM  
Anonymous polyester resin said...

Definitely a great design blog. This can be an individual and compared with your post. Keep it up more posting like this.

Saturday, August 24, 2013 2:40:00 AM  
Anonymous best office furnitures in Miami beach said...

Thanks very much, I appreciate you making this article available; the rest of the site is also well done. Have a great day.

Saturday, January 17, 2015 10:48:00 AM  
Anonymous Miami Luxury Condos For Sale said...

It was only a matter of time before a watch of this quality and style become the collector's obsession it is today.

Tuesday, January 20, 2015 5:51:00 PM  
Anonymous Outsourced Software Product Development said...

Software Product Outsourcing is a great way for companies and users to allow others to focus on development while merging their efforts in expanding the overall business.

Tuesday, August 25, 2015 12:34:00 PM  
Blogger Dida ELhaik said...

شركة تركيب باركية بالرياض
ارخص باركية في الرياض
اسعار الباركية في الرياض
فني تركيب غرف نوم بالرياض
شركة تركيب غرف نوم بالرياض
طريقة تركيب غرف النوم صيني

Friday, June 01, 2018 9:01:00 PM  

Post a Comment

Read more about Software Quality at the <<Software Quality Weblog Home