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Keys To Successful Outsourcing

Jun 29, 2001

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Financial Savings

There is increasing pressure by businesses to reduce overall IT costs, and today's economic conditions are emphasizing the point. Outsourcing in many cases provides a financially compelling alternative to providing the services in-house. However, if reducing cost year-over-year is a key measure, then it's essential that you craft the partnership such that the provider is incented to help you meet your goals. Changing the mindset of the outsource provider to go into year-over-year cost-cutting mode after they've enjoyed a year or two of flat or increasing revenues is very painful. The initial reaction is to rotate the most marketable and experienced staff off the assignment and to either back fill with junior or lower-cost resources, or spread the work to the rest of the less-experienced team. Like every other company, their goal is to grow revenues within existing clients, and increase their profitability. You can see how things will begin to degrade if you don't define this issue up front, and the end user is the one who suffers.

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