10 tips for successful outsourcing

Deciding whether to outsource IT processes and entire systems to an external provider is a dilemma that most CIOs and IT managers in the Middle East will face at some stage in their careers. With that in mind, ACN brings you its top 10 tips for successful IT outsourcing.

Tags: Frost & Sullivan (www.frost.com)Gartner IncorporationWipro
  • E-Mail
10 tips for successful outsourcing Kemp: Outsourcing is now starting to come of age in the Middle East region.
More pics ›
By  Piers Ford Published  July 14, 2010 Arabian Computer News Logo

ICT outsourcing possibilities have risen steadily up the CIO’s agenda over the last five years and there are signs that as the influence of multinational enterprises is felt in the wider business community, even SMB IT managers are starting to explore the benefits of distributing the day-to-day responsibility for managing some or all of their infrastructure and system delivery.

Research house IDC estimates that outsourcing will account for 23% of IT spending in the Middle East by the end of the year. With IT spend currently growing at around 12% a year, and expected to reach US$1.8 billion by 2013, a huge investment in across-the-board managed ICT services is clearly under way.

Increased automation, the web-enablement of swathes of business applications and, of course, the ubiquitous expectations of the cloud, have all had a profound impact on the CIO’s imagination.

It isn’t just about cutting costs, either. The efficiencies and improvements to business processes generated by outsourcing are increasingly demonstrable to even the most hard-nosed IT manager.

“IT outsourcing has come of age in many countries within the Middle East,” insists Derek Kemp, president of EMEA at Patni Computer Systems, who spent six years in Dubai running Logica’s operations.

“But not all countries have the human capital to enable large projects to thrive and scale upwards. As well as bringing skills and experience, outsourcers can bring established best practices and methodologies into their clients’ businesses,” he says.

1. Don’t cut things short

Research house Gartner predicts that in the next two years, 20% of businesses will own no IT assets, such is the force of the movement towards infrastructure outsourcing. But as organisations look at what no longer needs to stay in house, they would do well to remember one thing: outsourcing contracts pay dividends over time. CIOs looking for a quick fix will almost always be disappointed, mainly because they are failing to stimulate a top-quality response from the service provider. Trying for a too short contract tenure is one of the pitfalls that needs to be avoided, as the rewards are often not what they seem.

“Most of the benefits of outsourcing contracts come in if the contract is a long-term one, since it gives revenue visibility to the service provider, who generally does not mind making disproportionate investments for the customer organisation in that place,” says Wipro’s Pinaki Kar. “If, instead, the CIO tries to limit the contract tenure to too short a lifespan, it does not incentivise the service provider to put his skin in the game – and the real benefit of outsourcing does not get realised.”

2. Start small and measure your pace

For small and medium-sized businesses in particular, the prospect of wholesale outsourcing can be intimidating. The pressures might be intense: to reduce costs or to overcome the fact that the business is growing too quickly to develop essential IT skills internally.

Either way, it’s important to take your time and, if necessary, start the process with a modest element of outsourcing, define the scope of the project (the majority of IT outsourcing mishaps are caused by lack of clarity in scope and deliverables, according to Momenta Global’s Thampi), and link payment to milestones.

“These are potentially great changes and transitions,” says Frost & Sullivan’s McDonald. “You need clear milestones that will allow you to make them gradually rather than wholesale. Start with the less crucial aspects and have the service provider prove themselves at every stage. Make sure you have all your KPIs in place and take a phased approach,” she adds.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code