Paul Beauchamp

UK

Consultant

I’ve been involved in many outsourcing projects. However, I am still surprised to find companies are unprepared and outsource for the wrong reasons.

Many companies outsource because they believe that it will result in a better service and lower costs. However, if you outsource a poor service with poor processes, it will remain that way when outsourced. You may initially pay less but you will have the same management problems and a host of new ones - and will you have the management structure and expertise in place to address them after outsourcing?

It must be remembered that the outsourcer has different motives and will care more about compliance to the contract and profit than the actual service delivered, although this does not necessarily mean that they will not provide a better service. You should benefit from economies of scale, additional expertise, up to date facilities and be able to turn the service tap off and on as the need arises. But what company can tie down its requirements for a 10 year deal when a company’s business plan only extends to 5 – the added extras and new requirements make the money and cause the problems.

I recommend undertaking three major tasks before going down the outsourcing route: Identify What You Have, Determine What You Need and Reduce Costs.

The first two tasks help you work out what you could or should be outsourcing, but some IT should not be outsourced at all. The third (and it’s a good process to work through anyway) is to reduce your costs – if you do not, the outsourcer will. But in doing this task you will identify the true cost of your services - and the answer may show you provide an effective service for the price.