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10 Rules for Successful IT Outsourcing Services

Outsourcing couldnt be the panacea like its expected by some of organizations.

By Oksana Kikhtenko, Global Services
Sep 04, 2012
Outsourcing couldn't be the "panacea" like it's expected by some of organizations. Over the last few years, there were numerous reports in the media about the problems that organizations got with outsourcing their IT processes. That's why it is so important to understand the main principles of IT outsourcing.

According to The Computer Economics IT Outsourcing Statistics 2011/2012 study the amount of organizations that outsource IT work is increasing every year. The percentage of their total IT spending going to service providers rose from 6.1% in 2009 to 7.1% in 2010 and then leveled out, showing no year-over-year growth in 2011 and is expected to go up in 2012 (Figure 1).

IT Outsourcing has become a multibillion industry worldwide during the last ten years. The most common reasons why companies decide to outsource include: cost reduction and cost savings, the ability to focus its core business, access to more knowledge, talent and experience, and increased profits.

However outsourcing couldn't be the "panacea" like it's expected by some of organizations. Over the last few years, there were numerous reports in the media about the problems that organizations got with outsourcing their IT processes. That's why it is so important to understand the main principles of IT outsourcing.

As per our experience at Qualium Systems, there are 10 simple principles to make IT outsourcing process successful:

1. Establish clear goals.
Make sure the outsourcing service provider understands the project goals and specifications. All details are important.

2. Clearly define the scope and schedule of your project.
This might seem evident, but any successful outsourced project always starts with a clear statement of where you wanted to reach. Give as much information as you can about what needs to be delivered and be clear and realistic about your schedule requirements - project schedules can have a huge impact on project costs.

3. Don't choose provider based only on price and brand name.
Often even small IT outsourcing companies could generate really worthwhile product. Experienced managers who have outsourced many successful projects recommend discarding the highest-priced and lowest-priced bid. You should try to find balance of good value and quality results.

4. Review portfolios and samples.
Check the outsourcing company's previous work and make sure that their previous work meets your expectations for quality and way of doing. Additionally, you could ask them to provide a basic draft of a work plan. But never cross the line between asking for a basic draft and insisting that a contractor provide you with completed work. No qualified professional expects to work for free.

5. Work with a compatible provider.
IT outsourcing company's staff needs to be compatible with your company's culture and business objectives, with the right experience, communications skills, and working style. Because they will become part of your company.

6. Communicate openly from the first day.
Sometimes customer-outsourcer relationships break down simply due to lack of communication. When you distribute IT functions outside your organization, you need a great deal of coordination and back-and-forth communications - even more than when you distribute across your internal organization.

7. Take a Test Drive.
Before signing a long-term cooperation agreement for it services, you can order a small paid test project to ensure the quality of provided services.

8. Primary feedback.
Organize regular meetings (by phone or Skype), constant communication for clarification of current issues through chat (Skype, Gtalk, MSN, Yahoo Messenger etc.) or by e-mail, reporting about executed work and reached progress (usually weekly).

9. Retain responsibility.
Outsourcing shouldn't mean that you are abdicating responsibility. You still own the overall results, so you need to be actively involved in working and managing the outsourcer.

10. Ask for more.
There is a model of cooperation in IT outsourcing service called Dedicated Development Center (DDC), accordingly with which you have your own IT-team located outside your office but working for you. These people are not your employees and you don't need to pay any taxes, insurance or retirement benefits. But they work for you 8 hours a day, 5 days a week. They are perfectly aware of your corporate culture, work under your business processes and you weekly get reports from them.

It is effective to have a continuous need for software development as there's no need to look for software provider every time you need to upgrade your system or develop a new one. DDC is effectively used by many companies to save expenses, lower business risks and accelerate project start-ups.

Finally, while following these ten steps will set the right course for your IT outsourcing relationship, for it to truly succeed it must be based on mutual trust and respect.

The author, Oksana Kikhtenko, has Master's Degree in Engineering and Economics and five years experience in IT Marketing. Present, she is working as a Marketing Manager at Qualium Systems Ltd.

Original article: http://www.globalservicesmedia.com/global-services/analysis/2487/rules-successful-it-outsourcing-services/page/3