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Technology focused Information for Transporation and Logistics sector

by Gagan Goraya, BIZ IT SOLUTIONS,

IT outsourcing – Is it on your IT agenda?

This is the age of specialization; companies are building on their strengths. Having in-house IT expertise is not essential when it is not part of the core business. The companies are looking for solutions outside their own organization and acquiring whatever makes sense of their businesses. Companies coming out of recession have two main objectives; reduce IT support costs, and invest in IT technology to create efficiencies. At times like this IT outsourcing has become a key business strategy irrespective of organization size and IT budget.

In the last year over 60% of the businesses outsourced at least a portion of their IT. Some used IT outsourcing as a key strategy to trim their IT budget, which is often expected during recession period. Others took a more strategic approach; focusing on creating long term efficiencies using IT outsourcing. What is IT outsourcing and why are so many companies looking into IT outsourcing? IT outsourcing has been around for some time. Rapid growth in technology has triggered its acceptance among wide range of organizations.

It is impossible to acquire enough in house talent to deal with issues across multiple problem domains. This is why organizations maintain IT staff focused on core-competencies of the business. Most of the tedious and mundane functions are generally first to get on the IT outsourcing list. The major categories of IT outsourcing include:

1) Software development
This is probably the most talked about outsourcing strategy for IT. Large to mid-sized companies that develop software as part of ongoing software development, and deployment strategy mostly use this approach to create efficiencies at lower costs. The approach allows businesses to gain access to a greater pool of talent and at a relatively lower cost.

2) Application support
The most commonly used among small and mid-sized organizations, this is highly effective way to manage some of the IT functions. Two prime example of software support strategy at work is subcontracting email and web hosting. Organizations benefit a lot by not having to build and support infrastructure required for supporting such applications.

3) Infrastructure management
This area of outsourcing works for all types of organization. This is an effective strategy when you are trying to access a specific skill set, or when you would like to repurpose employee away from a tedious task. This approach allows you to maximize cost saving and dramatically reduce the management overhead. Generally, organizations may end up gaining some additional services that they didn’t have prior to outsourcing.

4) Service Desk support
Large growing companies can benefit greatly form service desk outsourcing. It is important strategy when your organization cannot meet the user needs in an effective way. The quality of services can be greatly improved using this strategy.

Depending on the size of the organization, each of the categories can result in major IT savings. In many cases organization outsource few or all of these. Of course organization must exercise caution when using any of these strategies however; a well executed strategy can not only save in the short-term but also be very effective in creating organization level efficiencies. In addition, by choosing the right partner, IT outsourcing allows sharing of responsibilities and opportunities available to the business manager to improve what is, in most organizations one of the key contributing services to business efficiency and effectiveness.

The main benefits of IT outsourcing are as follows:

  1. It allows organization to maintain Reliability, Maintainability, Serviceability, Resilience, and Security in their IT infrastructure and applications.
  2. It allows organizations to quickly acquire right skill sets.
  3. It allows organizations to transfers project responsibility to the outsourcers.
  4. It frees up resources within the organization to concentrate in key areas.
  5. Outsourcing IT can be used as tool to bring new knowledge into the company.
  6. It can help organizations cut IT budget.

Even though IT outsourcing is an effective business strategy, it must be evaluated carefully and managed by experts. It can represent a large change and it can have an adverse effect on IT performance. It is also important to set realistic goals and expectations. When engaging in such activity ensure that you treat your vendors are you partners and involve them in the overall IT strategy. It is often seen that vendors go through a natural staff turnover; if that happens, try not to get too involved in the vendors day-to-day activities. Maintain high level management of the vendor relying on weekly/monthly review processes.

IT outsourcing must be on the top of your IT agenda. Almost all companies can benefit from it. The cost savings strategies will allow companies to free up resources, and to focus in areas that require greater

Posted by Gagan Goraya on May 31, 2010 10:16 AM | Permalink

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