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Secret of Outsourcing Success

by Bruce Skaistis

Everyone knows the outsourcing story. Outsourcing offers significant potential benefits - some outsourcing efforts deliver promised benefits - other outsourcing efforts never live up to expectations and end up being terminated early. Why are some outsourcing efforts successful while other outsourcing efforts are unsuccessful?

Solution

I have had the opportunity to help organizations outsource IT and business functions and I have also helped organizations address outsourcing relationships that were not delivering promised benefits. From my experience, I have found that being prepared to move outsourced functions back in-house on short notice is the secret to outsourcing success.

I know being prepared to move outsourced functions back in-house sounds like a defeatist approach to outsourcing - but it's just the opposite. It almost guarantees outsourcing success.

Let me explain. What happens when you decide to bring an outsourced IT or business function back in-house? The first thing you do is make someone responsible for bringing the function in-house.

The person or group responsible for bringing the function in-house needs to have a good understanding of how the outsourced function operates and performs, so they begin to closely monitor the outsourced function. They begin tracking performance of the outsourced function and they work with the outsourcer to address any performance issues or potential problems.

You may never actually bring the outsourced function back in-house, but being prepared to bring outsourced functions in-house on short notice forces you to actively monitor the function's performance and manage the outsourcing relationship.

It is a mistake to abdicate management responsibility to an outsourcer - but I see it happen a lot - and it is a major reason why many outsourcing efforts fail to deliver promised benefits. The probability of outsourcing success drops dramatically when an organization takes an arm's length approach with its outsourced functions.

Always being prepared to move outsourced functions back in-house will produce another benefit. You never need to tell your outsourcers that you are prepared to bring outsourced functions in-house on short notice, but outsourcers are smart businesspeople. They know customers that actively monitor performance and manage outsourcing relationships have more options than customers that take a hands-off approach with outsourced functions - so they have extra incentive to provide you with the best possible service.

Moral of the Story

Being prepared to bring outsourced functions back in-house on short notice will go a long way in guaranteeing the success of your outsourcing efforts - and it will also make it much easier if you ever decide to bring an outsourced function back in-house.


About the Author

Bruce Skaistis is the founder of Skaistis Consulting. He began his career as a consultant with Arthur Andersen and was CIO of a large bank group before forming his own management services firm. Skaistis Consulting provides specialized support to help organizations successfully complete critical business and IT initiatives, optimize outsourced functions and maximize enterprise IT value. You can find out more about Skaistis Consulting at www.skaistis.com.

Copyright 2007 Skaistis Consulting All rights reserved. Used by permission.