The pros and cons of outsourcing to a service provider

Going backwards

When applied incorrectly, outsourcing can take an organisation's capability back by many years and can even cause firms to become uncompetitive in the market, according to Ashish Gupta, executive vice president and head of EMEA, HCL Technologies.

"Very often, we find that organisations make assumptions of 'outsourcing' being the panacea pill that will solve all their problems – which it never can be. As such, getting a good understating of what it has delivered to other organisations in the market and aligning expectations before starting any outsourcing activities is a great place to start," he says.

Czaja says that companies could mitigate any risks of outsourcing by beginning new engagements with a short test project first, if possible.

"We offer three to four month engagements to begin with; a much smaller investment giving the client the chance to get a feel for our methods, and for us both to iron out any initial kinks. We also set up regular milestones within projects, so we can consistently check and review the direction in which the work is going," Czaja notes.

Cloud tech

Cloud technology enables a different approach to sourcing services


Dr. Katy Ring, research director of Cloud & IT Services at analyst firm 451 Research, says that the future of IT outsourcing lies with the "out-tasking of digital process services". She adds that cloud technology enables a different approach to sourcing services.

"[This is] because the virtualisation and layers of abstraction that it provides mean that IT service providers can more easily be used to out-task digital process capabilities in an agile way, to directly deliver differentiating business outcomes that are part of a company's core competency," she says.

Ring says that the requirement for continual service improvement in the digital age also suggests that a 'cloud-tasking' collaborative model of working with external service providers will be most appropriate, rather than the 'transform, lift and shift' model that the IT outsourcing market uses.

"And since many organisations view IT as a service (ITaaS) as their strategic direction of travel, the internal capability to manage cloud services is being developed within enterprises around their cloud management platform," says Ring.

In the end, the decision to choose an outsourcing partner is a tough one. If it goes wrong, it can have a negative impact on an organisation's agenda for transformation. Get it right and it could be the start of something beautiful.