| The speed by which technology changes, coupled | | | | the company on a day-to-day basis. It is |
| with the costs of maintaining a fully trained and | | | | necessary to factor all of these issues into the |
| equipped IT department, has outstripped the | | | | decision whether or not to outsource. |
| ability of many mid-sized companies to | | | | Many businesses reach the decision to outsource |
| cost-effectively maintain their IT infrastructure. | | | | their company's IT infrastructure when they |
| The expense and difficulty of recruiting, training, | | | | conclude that they simply do not have the time, |
| and retaining quality IT staff has become a | | | | personnel or financial resources to maintain the |
| financial and human relations nightmare. | | | | infrastructure themselves. |
| Faced with the perennial threat of technological | | | | Companies that outsource their IT projects need |
| obsolescence and the knowledge that competitors | | | | only manage the client/vendor relationship while |
| are fighting harder for a larger share of a | | | | the outsourcing vendor manages the technical |
| shrinking market, many executives now look at | | | | aspects of the project. This can save a company |
| IT outsourcing as not only a logical and | | | | as much as 65% in labor costs alone verses |
| cost-effective solution, but as an absolute | | | | completing the project in-house. |
| necessity for maintaining business viability. | | | | According to a report issued by AMR Research, |
| By outsourcing IT needs either on a full-time or | | | | the number of companies outsourcing parts of |
| project-by-project basis, a company is able to | | | | their Information Technology (IT) organization will |
| maintain a high level of both internal and external | | | | grow 50% in the next two years. |
| customer support, access required skill sets on an | | | | However, AMR warns, in order to get the most |
| as-needed basis, temporarily ramp up to meet | | | | benefit out of an outsourcing partnership, both |
| seasonal or market-specific demands and then | | | | parties need to build their relationship on shared |
| scale back to a skeletal staff when requirements | | | | goals first and then cost savings. This ensures |
| are light. This reduces employee costs, project | | | | that both the client and vendor's core business |
| overhead and allows targeted teams of | | | | philosophies are aligned and that the two |
| professionals with project-specific skills to focus | | | | organizations share common goals and measure |
| on a project's core requirements. | | | | success the same way. |
| The decision to outsource is cost-effective and | | | | AMR also says that companies which are able to |
| logical when viewed against the alternative of | | | | establish a partnership with their service provider |
| staffing a bloated, multi-discipline IT department | | | | are seeing better returns (as much as 80% |
| that may or may not have all of the required | | | | higher savings) and getting access to process |
| skills and tools for any specific requirement. | | | | improvements and the unique skills of the service |
| Even companies with a cost-efficient IT | | | | provider. |
| department can benefit from outsourcing specific | | | | The Cutter Group, another Internet Research |
| tasks that do not warrant a full time position. For | | | | Company, recently conducted a business-IT |
| example, a Database Administrator may only be | | | | alignment study of 154 companies. Nearly 29% |
| required for occasional database tuning and | | | | said that hiring difficulties was the greatest |
| maintenance when necessary, or to make | | | | motivator for them to outsource their IT |
| changes in tables to support the requirements of | | | | requirements. The complete breakdown of |
| a specific project. Staffing this position full-time | | | | responses included: |
| does not make economic sense when an | | | | Reason / % of Responses |
| outsourced DBA can be called upon only when | | | | -Difficulty hiring skilled IT professionals: 29% |
| required. | | | | -Lack skills in-house: 20% |
| Beyond the cost of staffing, executives must also | | | | -Budget: 14% |
| consider the costs of proficiency training and | | | | -Business changes: 12% |
| licensing the tools and software that internal IT | | | | -CIO or senior management mandate: 12% |
| staff needs to perform their jobs. Typically | | | | -Reorganization: 7% |
| outsourced personnel come equipped with their | | | | -Downsizing: 2% |
| own tools and the client has no expenditures | | | | -Other: 4% |
| related to their use. | | | | As you can see, only 14% of the respondents |
| There are less tangible costs to be considered as | | | | viewed IT outsourcing from a strictly budgetary |
| well. Time to market, lost opportunity costs, and | | | | point of view, while the majority sought |
| drops in service quality levels due to staff | | | | outsourcing relationships to offset staffing-related |
| overload, all affect the productivity and | | | | challenges. |
| profitability of any company. When a company | | | | If you see your company in any of the figures |
| brings in an outsourced team to assist on a | | | | reflected above then you should investigate IT |
| specific project, or to complete that project | | | | outsourcing to determine if your company will |
| entirely, the company's internal IT staff members | | | | benefit in any of the key areas mentioned above. |
| are free to focus on the tasks required to run | | | | |