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The current predicament of a mid-market CIO while selecting an IT outsourcing partner
Today CIO’s have an added responsibility to transform businesses into a better enterprise. The new age decision makers, drive their business through dynamic markets, delivering on an architecture that is built on a scalable platform and which has the capability of rapid response and providing tools that offer insight and decision support.
According to a study conducted by a top analyst firm, 31% of IT services have been outsourced in 2017 and this will continue to grow in future. Outsourcing has revolutionised the way business is done in almost all sectors. Though a gradual process which evolves with time and as per the latest requirements of the industry, the basis of outsourcing business is to accelerate the pace of one’s business and increase its efficiency. Outsourcing is certainly a blessing for the business community in today’s dynamic market.
But the process, or steps in selecting “the right IT outsourcing partner,” need to be performed after careful analysis of many factors, any one of which, if overlooked, can put an outsourced project, in going way over the projected timeline and budget and leave the business or the product way behind their competitors in its go-to-market. Factors often associated with outsourcing, such as over-promising, under-staffing, security breaches, culture shock, and many other factors can turn profit margins into cost overruns and software that falls far short of the client expectations.
To build a competitive advantage the mid-market and high growth enterprises need to carefully select an IT outsourcing partner. In this blog, I will discuss some of the steps you need to consider before selecting an outsourcing partner for the purpose of structuring a global delivery model leveraging onsite and offshore advantages.
10 steps to consider while selecting an IT outsourcing partner
Identify the need for Outsourcing
First and foremost, identify your need to outsource. Many of the mid-market and high growth enterprises outsource as part of cost reduction. Up until a few years ago cost reduction was the major reason to outsource. However, it should no longer be looked at as the sole driving force. You should be looking at
You should think long and hard about the benefits that can be gained from having a distributed and flexible staffing model to cope with the inevitable ups and downs in the dynamic market.
Support from the Board
It is inevitable that some members of your staff will not be in favour of outsourcing. Some of their concerns may be purely self-preservation but others may be genuine perfectly valid issues and it is vital that all are listened to and that the senior team speak with one voice in detailing the reasons for outsourcing and benefits it will bring. The board need to see and understand the benefits and champion the relationship between the non-IT fields and outsourcing. Therefore, to be successful there must be buy-in at the most senior levels within the company, especially the HR as the word redundancy might pile up and make it harder for the outsourcing companies.
Identify an IT partner with the same rigour and passion of the larger corporates
If you're one of the Fortune 500 firms, outsourcing vendor size may not be an important factor, but for smaller firms, getting the attention of one of these large corporates can be tough. While selecting an IT partner, verify the expertise of the core team's background.
For example, Ignitho’s co-founders having previously led business units for the likes of Accenture, Mindtree, Cognizant and HP, as well as other senior professionals who have joined Ignitho from the likes of Capgemini and Infosys, enables us to deliver for our customers with the same programme rigour and approach to top quality, without the engagement overheads of bigger industry players.
Cultural fit of the IT Partner
As responsible IT executives before selecting your partner, you will have performed due diligence, take up references, go on site visits etc. However, you also need to consider the cultural fit and the size of organisation you are partnering up with. You don’t want to be a very little insignificant player; the retention of whose business is neither here nor there to the outsourcer. Similarly, you need a partner that can meet the needs of your organisation with very little or preferably no delay at all. Think about your partner as being a long-term strategic fit and not a short-term tactical fix.
For example, Ignitho’s global Sales & Delivery presence provides you, local touch-points at every stage to facilitate a smooth transition and ensure any cultural differences are dealt with quickly and seamlessly. And a unique and strong CIO Ecosystem provides you with peer guidance from locally based ex-CIO’s to “get it right the first time.”
Check for expertise in multiple software technologies
The expertise in multiple software technologies is often overlooked but is crucial to the success of any outsourcing deal. Choosing a vendor who knows only a few technologies, even if they're best in class in the ones you think are right, risks the “hammer and nail” problem: to those armed only with a hammer, every problem looks like a nail. Remember, you're hiring the outsourcing vendor for expertise you don't have internally, so be careful not to reproduce your own limitations in this choice. Look for a partner with developers in a wide variety of technologies to increase your chances of success.
At Ignitho, our delivery strength lies in the robust pool of experienced, technically competent resources across Microsoft, Open Source, Java, Mobile, Machine Learning and Augmented and Virtual Reality technologies.
A Clarity in the Requirements and What is Actually Being Outsourced
Make sure left and right hands within your team know what is being proposed. You don’t want manager A thinking you are outsourcing Networks and manager B thinking you are outsourcing Storage. Similarly, you need to be very clear what you expect from your partner and what they are taking responsibility for.
Abdication During Handover Period
Your board ultimately don’t care who provides the IT service if it is delivered correctly, timely and to cost and quite rightly the IT management team are held to account to provide that service so don’t pick a supplier and think everything is complete at the point of selection. You need to work together to achieve the benefits.
At Ignitho, we collaborate on methodology with a world-renowned thought leader in Frugal Innovation (the ability to ‘Do More & Better With Less’) from the University of Cambridge, Ignitho specialises in:
Plan a long-term outsourcing relationship
You may be thinking of outsourcing only as a short-term project, but the most effective use of outsourcing, and the highest ROI comes from a long-term relationship.
Ensure ongoing relationship management
This carries on from the previous 2 points. Once up and running have regular interactions e.g. steering groups, cultural events etc. Ensure talking is maintained at all relevant levels. It must never become a, them and us situation. The more the outsourcers are treated as, and feel, part of the team the better the chances of lasting success.
Be considerate of your outsourcing partner
However, as with your local staff, you get much better results by embracing the outsource team as part of your team. Have regular meetings via phone, webcams, VC etc. Ensure people get to know each other exactly as they would if they were sitting next to one another. Where the opportunity arises to visit the outsourcer at their offices in their country. The benefits, although not always instantly measurable, are very high and are appreciated by both parties. By embracing the outsourcers as part of your team/company you get better buy-in and the loyalty, commitment and sense of pride that goes with feeling part of an organisation.
If the process of selecting an IT outsourcing partner for application development and management seems daunting, you’re probably doing it right. A thorough consideration of all the relevant factors—with a look beyond the obvious criteria—is the only way to arrive at the best decision for your business and your specific circumstances. I hope this blog has provided an organized way of approaching this multifaceted issue, and we hope it provides a useful initial point for selecting an IT partner for application development and management for the mid-market enterprise.
Rob is an IT professional of over 30 years standing within the Travel and Financial Services industries. Having been an IT Director himself, he offers the client perspective from his experience in the selection of outsource & offshore partners. Rob is also well versed in the nuances of managing such relationships, dealing with internal and external stakeholders at all levels. He prides himself on the ongoing success of all the outsourcing he has managed. Read More