The last few years have witnessed a great deal of economic instability, company upheaval and strategic refocusing. In the midst of these changes, outsourcing has continued to be a strong and beneficial outlet for fulfilling IT projects. To assist you along this path, we've pulled together a list of key points you should consider when approaching a new outsourcing project or rethinking a current contract
Click through for tips on completing a successful outsourcing project.
Break down transformation projects into stages that can be contracted for as the project progresses, allowing for more accurate estimates and better flexibility.
Sometimes, in the case of large-scale business transformation, an extended contract with a single outsourcer is the most logical option. But when you sign such a deal, it makes sense to structure the relationship like a smaller, shorter one, with a series of smaller "contracts" within the large one.
No matter the size of the project, a solid contract should always include clearly outlined roles, responsibilities and payment structure.
A flexible approach to sourcing lets organizations choose the best supplier when new projects or services are needed.
A strong governance model should be in place to ensure commitments are met and service providers are managed effectively.
Many experts agree a single provider generally works better than a multisourcing model for large-scale, transformational projects. Companies should consider the size of the providers being considered, the priority of the project in the vendor’s overall workflow, and how easy it is to access support.
Carefully review and map out processes before outsourcing them. Create diagrams for every process in the organization and spend time with the vendor to answer questions such as when and where handoffs would occur.
Organizations must be careful to retain ownership of their strategic direction for IT, while outsourcing providers serve as facilitators and contribute best practices. And carefully review internal processes before turning them over to an outsourcing company.
Ensure that you have enough in-house staff to manage outsourcing relationships. Without sufficient staff to focus on relations, as well as maintain services still in-house, important details can be overlooked, services interrupted and deadlines missed.
There are many risks involved in constantly trying to get a lower price from outsourcing providers. Service can suffer, for one, and rest assured providers will look for ways to recoup deep early discounts over the life of an outsourcing contract.
Some companies are realizing the inherent flaws in this transaction-based model and are looking at vested outsourcing approach. In vested outsourcing, providers determine how they can best apply processes, technologies and capabilities that will drive value to their customers. The customers, in turn, agree to allow providers to earn additional profit for achieving this incremental value. Clients also commit to providing a certain level of business for providers.
Contract restructuring, which includes renewals, renegotiations or expansions of existing contracts, accounted for 42 percent of the outsourcing activity in the first quarter if 2010. Whether it be for economic reasons, mergers and acquisitions or changing business requirements, contracts should be reviewed periodically to ensure they are still meeting the long-term strategic goals of your business.