Key Areas to Drive Outsourcing Efficiently

Outsourcing is where a company outsources services to a third party other than the one in which the client company is based, primarily to take advantage of lower labor costs and resources and get better output at cheaper value. The business case for outsourcing varies by situation and company needs, but reasons for outsourcing often include some basic things like lower costs and resources, variable capacity the ability to focus on core competencies, lack of in-house resources, lack of technological skills and talents.

• Cost reduction and Containment – Companies are outsourcing more now a days, but there are indications that these choices are based on strategic business requirements rather than an actual cost-cutting mechanism and cost saving, although cost is slowly entering more into the decision to outsource because it does play an important role. The percentage of respondents indicating that they outsourced activities as an operating cost-cutting mechanism has grown in the past few years.
• Improved quality of services – In support of industry standards and quality initiatives employees should have a good understanding of technical skills, with a certification program for expert professions such as IT architecture, project management, consulting, services professionals, and IT availability. Quality of services plays an important role and is very important part of outsourcing strategy.
• Infrastructure Scalability and Flexibility – Focus more on business needs and IT opportunities, which had become overshadowed by technical service matters, should be one of the major points to be discussed. Increase the value from the service providers and contracts engaged in its IT infrastructure delivery and get optimum advantage from it. There should be more elasticity in service capacity to better cope with peaks and troughs typical of the business.
• Reduced Administration time – One particularly effective strategy being employed by some in order to help contain costs and reduce inefficiencies has been partnering with third party service providers for the delivery of administrative functions, such as payroll and human resources which plays an important role in every organization. By automating certain human capital management functions to a third party, these organizations are making cost saving and helping their staff up to focus on direct constituent services.
• Enhanced Security – Organizations are looking to vendors to provide more than equipment, deployment resources and monitoring services with enhanced security. Security resources are scarce, expensive and difficult to retain in the market and we should be able to retain them by providing some benefits. IT Security outsourcing ensures that organizations maintain and enhance their enterprise security posture by leveraging the provider’s skill set and knowledge to reduce their vulnerability to security threats and improve quality.
• High and flexible SLA – Service Level Agreements (SLAs) focus on measuring productivity and service quality improvement for IT outsourcing project and are the key to determining the true value of an outsourcing engagement with vendors. SLAs validate expectations of the respective parties and set parameters for measuring project success and quality of deliverables. It also helps to measure the status of an outsourcing project and helps to score the performance of the vendor using measurable and enforceable results.

About Author:

Shailesh Nambiar is consultant and part of Systems Plus Pvt. Ltd. He actively contributes to information technology and VMO. He can be contacted at: shailesh.n@spluspl.com