IT Outsourcing: Maturity Phase
As I was surfing the Web the other day, an expressive headline
caught my attention: "Outsourcing is stupid". I looked
through the article by Alan Fisher, co-founder and Chairman of
Iron Speed, Inc., only to find out that "outsourcing is
stupid when you can do the work cheaper at home."
Ironically, this anti-outsourcing truism sounds to me pretty
much the same as the first rule of outsourcing (as I formulate
it): outsourcing is the best solution when you don't possess
enough in-house expertise and/or budget for an IT development
project. It's great when you can afford to develop in-house
everything you need, but what if have to retrain your employees
or hire new ones, pay for re-equipment, and deliver a project
against a tight deadline? I'm afraid your choices are limited to
giving up or resorting to the outside expertise. No wonder the
notorious drawbacks of IT outsourcing and criticism from the
general public don't seem to affect the scope of this
omnipresent phenomenon.
New Opportunities - New Relationships
According to 2004 IT Outsourcing Study conducted by
DiamondCluster International, 86% of Global 1000 IT executives
and providers of IT outsourcing services who participated in the
study expect outsourcing to further increase next year.
Moreover, outsourcing is more than simply cost savings now.
"While reducing costs is still the number one reason fueling the
outsourcing trend, another key factor is that companies are
looking to free up internal resources to focus on more critical
initiatives," says Tom Weakland, who leads the outsourcing
advisory services practice at DiamondCluster International.
Globalization creates new opportunities for those businesses
that know how to establish sophisticated and interdependent
relationships with their offshore vendors. These "enhancement"
and "frontier" relationships, as Gartner calls them, are typical
for the maturity phase of IT outsourcing.
Offshore Dedicated Team
At its maturity phase, outsourcing advances beyond the
conventional project model: offshore vendors provide their
customers with exclusive full-time dedicated resources on a
long-term basis. An Offshore Dedicated Team (ODT) customized to
the customer's requirements, practices, and even culture
operates as an extension of the in-house staff. The ODT model
sets the customer free from such problems as incorporation,
recruitment, office lease, infrastructure set-up and
maintenance. Using an ODT, a business can reduce development
costs, get access to specific skills, gain better control over
the entire development process, achieve easy scalability, and
have the accumulated expertise transferred back in-house.
Microsoft, Intel, Sun Microsystems, IBM, Dell, Motorola, and
other major IT corporations have been using offshore development
centers for years. By outsourcing work to their offshore
centers, these companies advance their technologies, obtain
substantial cost savings, and at the same time allow their
in-house teams to concentrate on their core tasks.
Nowadays, an increasing number of mid-size businesses outsource
large-scale and/or continuous projects to offshore dedicated
development centers and teams. Such projects involve custom
software development and/or maintenance, R&D, testing, QA. The
time of operation of an ODT is normally six months or more,
otherwise the invested time and effort don't pay off.