Outsourcing vs Insourcing
Tuesday 04 July 2006 at 07:01 am. Having been on both sides of the outsource vs insource debate I have a few observations -Outsourcing Pro's
* Internal IT can focus on big-picture strategic direction while the service provider handles the dull BAU (Business As Usual). So they have all the fun while the provider does all the donkey-work. In a mature partnership there would be a high degree of collaboration between both parties in terms of future direction inline with supporting business objectives.
* Using a leveraged team for services, an organisation no longer needs to pay to keep highly skilled specialists on staff (eg if you have a stable secure network you don't need a fulltime networking or security guru). Also the burden/risk of hiring people, training them and staff-retention is moved to the service provider (afterall they're contracted to maintain certain service levels regardless of staff turnover or resource levels).
* It may be apocryphal (its certainly a figure outsourcing companies tout) but first contact fix rates for fixable calls rises from around 30% to 70-80% under an outsourced service desk. So staff should experience significantly improved service levels for simple problems.
* Incident management and downtime becomes the service providers problem.
* Depending upon the particulars of the outsourcing arrangement normally onerous/tedious tasks such as asset tracking, management and auditing (hardware and software) becomes the service providers task.
* A service provider will follow a process laid down by the contract - this can be both good or bad depending upon how it is interpreted on an operational basis. Certainly from a BAU perspective it should mean that everyone will be dealt with in a consistant manner (VIP's are always the exception of course
that can sometimes be difficult to do when people deal direct with internal IT.These points are particularly relevent if the organisations core business is not IT related.
Outsourcing Con's -
* The contract needs to be very very well written and the relationship between the provider and client needs to be very well managed - to strictly enforced and it becomes an 'us and them relationship' rather than a partnership and if the contract is to lax and quality of service starts to slip. This is a fairly fine balancing act and is listed as a con because its really tough to manage well.
* An organisations internal IT can become disconnected from the client community if services are outsourced.
* A service provider will usually do 'just enough' to keep the client happy. Until a certain level of trust and maturity is achieved its difficult to see significant improvements or innovations contributed back into the organisation. Then again for certain organisations this may not be an issue if the innovations and improvements are driven by their own internal IT or if you just need to keep baseline services operating normally (eg nothing flashy just keep systems working).
* Problems can often be hidden beneath the surface depending on the nature of the reporting and quality of esacalation/feedback - if a provider is responsible for system downtime but they're supporting a flawed application then all the faults may not be properly fedback to internal IT (if a fault occurs but no one is impacted as it is out of business hours will it still get flagged back to IT ?).
