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IT Outsourcing Strategies, Best Practices Pros & Cons

IT outsourcing strategies

Business leaders are responsible for gauging the needs of a company and determining the most cost-efficient means of acquiring the necessary assets to get the job done. There must be a balance between heavy investments to stay competitive and discounted selections to secure budgetary demands. Many companies are opting to invest in IT outsourcing projects, rather than maintaining in-house IT departments with salaried staff. All companies have IT demands but do not need to manage certain activities to function well. Outsourcing mundane or consistent IT operations is an easy way to reduce managerial burden and free up resources without sacrificing growth strategies or competitive edges.

Making IT Work
IT solutions impact all aspects of a business in today's marketplace. No longer are sales, marketing or other departments independent of company networking demands or application use. Therefore, IT experts are always in demand either as in-house players or outsourced consultants. To ensure the company is getting the most out of an outsourcing contract to optimize all areas of business, CFOs must research available partners and develop detailed agreements to ensure expectations are met and relationships do not fail. Just as outsourcing partnerships can be financially beneficial to many companies,  losses can be significant if the relationship goes south.

CFO recommends executives consider a few common issues that may arise when launching an outsourcing project to prevent frequent complications or disruptions. While outsourcing allows certain responsibilities to be taken off the shoulders of in-house staff and decision makers, those obligations should not be forgotten. By nature, outsourcing is designed to require less oversight while offering the same output. However, it is still important for executives to have an accountability strategy in place so if errors occur or goals are not met there is someone held responsible for remedying the problem.

Furthermore, outsourcing firms must offer business strategies and workflow procedures that mesh well with existing company culture. Adding third-party providers into a company mix can be a tricky business, as the workers are functioning independently but still play a vital role in the enterprise's functionality. Make sure outsourced workers are introduced to existing staff and are comfortable with the way things flow throughout the organization.

It may also be a wise decision to work on improving vendor management strategies. It is important to find a vendor or outsourcing firm that can be trusted so responsibilities can be released and resources allocated to other departments. However, executives are still tasked with managing vendor relationships to ensure outsourced activities are seamlessly integrated into business models and satisfaction is enjoyed by all parties. Work with vendor leadership continually to gauge sentiment and address concerns early for a more positive relationship.

Avoiding Complacency
Just as outsourcing offers significant benefits, it can also garner unwanted costs when not deployed effectively. If a contract does not clearly define goals, expectations and tasks, a company may feel held back by an outsourcing partnership or constantly backtracking due to errors. Likewise, selecting a provider with limited industry experience or expertise can result in compliance issues or delay in return on investment.

A recent study from KPMG revealed many companies that outsource IT services are enjoying cost benefits, but not much other value has arisen from the relationship. The study found the vast majority of IT outsourcing firms are reducing operational costs, supporting global opportunities and standardizing processes. The partnerships are underperforming in gaining access to new technology, analytical capabilities or providing innovation. Companies seeking more than to save a few dollars should take their time selecting an outsourcing provider. Researching outsourcing opportunities initially and over time will keep the business on the cutting-edge of growth strategies and advanced resource management success.