subject: Outsourcing process [print this page] Outsourcing process Outsourcing process
Outsourcing
Outsourcing is viewed as involving the contracting out of a business function to an external provider. Two organizations may enter into a contractual agreement involving an exchange of services and payments. It is the "make or buy" decision as applied to the information systems and technology functions of your company.
With continued pressures to cut costs, downsize, reduce software development backlog, and re-engineer, the promises of outsourcing look very bright:
improved service and performance
expert resources and staffing
shorter systems development cycles
better management control
elimination of personnel problems
stabilized or reduced costs
improved business focus
possible "tax" advantages
The 20-Step Program
Organize a top management Steering Committee to plan, monitor, and oversee the search for and transition to outsourcing
Identify and engage an expert team to guide you and your organization during the outsourcing decision, selection, and contracting processes
Identify critical internal resources
Identify what is good and bad about your current installation in terms of: service; capability; performance; uptime; costs; user satisfaction; backlog; on-time, on-target systems delivery; controls; ...
Update the company's strategic business plan
Develop a strategic systems plan
Identify the alternative hardware and operating systems alternatives and determine the recommended new architecture needed to develop and support the new systems plan
Understand your cost structure and determine future costs to create and support the projects outlined in the strategic systems and architecture plans
Identify your current and anticipated usage
Review the strengths and weaknesses of the outsourcing alternative
Using your expert team, identify several outsourcing alternatives
Determine which areas of your company you would like to outsource
Develop a rigorous request for proposal (RFP)
Invite bidders to a bidders conference
Evaluate proposals against your pre-established, and fully documented, criteria
Rank proposals so that you have a backup vendor
Checking references is a critical part of the evaluation and comparison of outsourcers
Negotiate the contract
Monitor, manage, modify, and steer the outsourcer and the contract as required over time
There are some disavantages to outsourcing as well. Outsourcing eliminates direct communication between a company and its clients. This prevents a company from building solid relationships with their customers, and often leads to dissatisfaction on one or both sides. Any sensitive information is more vulnerable, and a company may become very dependent upon its outsource providers, which could lead to problems should the outsource provider back out on their contract suddenly.
