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Frequently Asked Questions |
Our View on Outsourcing
Our View on Outsourcing
- What is outsourcing exactly?
Outsourcing is an arrangement in which one company provides services for another company that in some cases is provided in-house. Examples of outsourcing options available include:
- Offshore
- ASP/SaaS
- Web Hosting
- Application
- Managed Services
- Business Process Outsourcing
- IT Infrastructure
- Human Resources
Not so long ago, outsourcing was considered a simple cost-cutting maneuver. Today it is viewed as a strategic initiative that will shape your enterprise for years to come. As with any business enabling initiative, IT outsourcing should have clearly defined goals and objectives, aligned with one of the following major areas:
Tactical Reasons
- Reduce and/or control operating costs
- Resources are not available internally
- Specific Functions are difficult to manage
Strategic Reasons
- Improve business focus
- Focus on core competencies
- Free up internal resources for other purposes
- Access to world-class capabilities
- Shared risk (regulatory compliance)
Transformational Reasons
- Ability to bring new solutions to customers faster
- Option to enter new markets with reduced risk
- Assimilation of mergers, acquisitions and divestitures
To ensure success, companies must fully understand the motivation behind their decision to outsource, as well as the desired results.
Every company is a candidate for outsourcing. The challenge is identifying your organization's core competencies and then determining what supporting functions of the organization can or should be outsourced.
To determine what projects or tasks should be outsourced, a firm must fully examine its core competencies. Some important questions to ask include the following:
- If you were starting your business from scratch today, would you build this capability internally?
- Would other companies hire you to do this for them?
- Will tomorrow's leaders of the company come from this area of the business?
- Are you receiving world-class services at a competitive cost today?
- Does this process create or defend a unique competitive advantage for your firm?
- Is this business process directly contributing to business growth or expansion?
If you answer no to a majority of the questions above, consider yourself a candidate.
Source: www.Firmbuilder.com
- How do I calculate my true cost of operations?
Understanding your total IT expenditure is more than knowing your capital and operating budget. Examine the following areas to know your true cost of IT:
- Staff augmentation for projects when resources or specific skills are lacking.
- Hidden costs such as resources that are from other departments / divisions that are utilized all or part of the time.
- Poor performance or instability in the environment. Calculate how much it costs the organization if critical business applications are down.
- What is your staff turnover in the IT department? How much does it cost to recruit and train new personnel?
If you are considering outsourcing only a portion of IT (e.g. application management, desktop, etc) know how much supporting just that portion costs you to be able to compare to an outside service provider. Finally, if you are considering outsourcing to improve service levels or change the way IT services are delivered to your customers, such as 24/7 support, factor in what it would cost for your organization to ramp up to provide those services.
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