When Do You Make the Outsourcing Call?
When you're making the decision to outsource IT, it's important to remember that the bottom line can take more than one form.
Companies have many choices when it comes to hiring their workforce for IT operations. They can employ a workforce in-house and hire consultants to handle the really tricky things, have a full-blown staff that handles everything, outsource everything, or varying levels in-between. This is the first in a pair of articles that will discuss some considerations management should heed.
Outsourcing, in the past, was used to farm out the undesirable jobs, but many companies are now outsourcing their entire IT operations: it isn't just for software development anymore. If this is a business decision focused on lowering costs, it's clear that lowering revenues at the same time isn't the desired outcome. That's exactly what can happen, especially in the software industry, but also with IT outsourcing. The consequences are never immediate, however.
When considering the hiring of full-time staff, human resources departments pay very close attention to whether or not people look good on paper. If applicants meet the requirements, they are interviewed in person to test whether they truly fit the position. Companies that offer IT and programming services will advertise their employees' skill level and specializations, but the hiring company rarely verifies this. Intuitively, it makes sense that an exercise in faith seldom leads to project fruition. Sadly, most of the people thinking about the ramifications of outsourcing aren't people who can succinctly state the business case for avoiding "total outsourcing."
Conversely, many strong management teams justify outsourcing as a means to focus on their staffs' expertise. This is the absolute correct use of outsourcing.
Outsourced operations have been successful, but not without skilled and highly involved management being part of the picture. For example, it is impossible to get a software specification document correct the first time. It's always subject to interpretation and error, even when the implementers are speakers of your native tongue. Companies now offer an entire IT solution-in-a-box, and you should be wary. Without constant supervision and guidance, daily operations can quickly diverge from your business initiatives. When this happens, considerable resources get funneled into interacting with the firm's management to devise a solution. Without a dedicated project or IT manager on-board, outsourced services simply don't work for most companies.
ComputerWorld's recent special on the state of IT careers projected that the majority of jobs in IT will be one of two types: high-level technical, or managerial. Further, it goes on to discuss how these two roles will converge. Project leadership, system analysis and design, network design, storage administration, BI, data management, and IDM are all aspects of the IT world that require intimate and thorough knowledge of one's infrastructure. You wouldn't outsource CFO responsibilities, and certainly can't afford to outsource the management of technology; your company depends on IT just as much as it does the CFO.
The term "outsourcing" isn't always clear when we're talking about IT operations. Hiring a headhunter to find contract employees isn't outsourcing, it's more akin to consulting. The word "consulting," as we're using it today, refers to outside specialists that come in to solve a specific problem or implement new technology.
Increasing contract employees and consultants is a viable alternative to the complete outsourcing of IT. The senior staff that is trained and already familiar with the infrastructure can guide the contractor and consultant's work. The business case for contractor work equates to a fairly noticeable savings, both in terms of time and money (payroll and benefits). Your employees' time, however, is not always saved. They need to familiarize contractors with your environment, a task that can take considerable resources.
Consultation companies are normally available to provide services that you don't have the expertise for. Often, new technology deployments can become hundreds of times more efficient with the aid of a consultant. Current employees can learn from the consultant, and they will in turn become able to maintain the new technology. The largest advantage to consulting companies is that you know their employees are valid, and you also have the ability to establish a relationship. If the same consultants work on multiple projects, they're bound to be more efficient simply because of their prior knowledge of your organization.
A costlier alternative is to send the best and brightest to training seminars. Not only does this take away from their work time, but also, these training seminars generally approach a noticeable percentage of the cost of a consultant. Employee morale may be broken if travel and training are completely abolished, but definitely consider the services of a consultant for those obscure technology deployments.
Outsourced IT takes the form of lesser-degree services as well. For example, many companies will come set up all kinds of monitoring software and hardware for your datacenter. Managed remotely, they can be used to troubleshoot and alert full-time staff when problems arise. Varying degrees exist, too; many of these companies will work with local contractors to come in and fix the problems. This approaches the total IT solution, but just note that all levels of service are available, and outsourced IT will often make use of consulting services themselves. Wouldn't it be better to manage these things with your business goals firmly at hand, and simply purchase consulting when it's needed?
In the future, expect companies to make extensive use of consultants, more so than today's IT world. All that may be necessary on-staff are a few managers, many low to mid-level administrators, and a CIO.