7 Signs You've outsourced too much to IT service providers | Features | ChannelWorld.in

PARTNER HOTLINES

7 Signs You've outsourced too much to IT service providers

By Stephanie Overby, CIO.com on Jan 11, 2012

Smart IT leaders understand that successful outsourcing requires a balance of internal and external skills. At a minimum, CIOs need a sufficiently robust internal IT organization to keep the supplier honest, assist in dispute resolution and get maximum value from the relationship.

The lure of IT outsourcing is strong from the promise of better service levels and lower costs to the premise of freeing up internal resources to focus on strategic business issues. And if your IT service provider and, let's face it, a few of your CXO peers had their way, you'd send it all out the door to a third-party.

Smart IT leaders understand that successful outsourcing requires a balance of internal and external skills. At a minimum, CIOs "need a sufficiently robust internal IT organization to keep the supplier honest, assist in dispute resolution and get maximum value from the relationship," says Bob Kriss, a partner and litigator in the outsourcing practice of Mayer Brown.

But it's a slippery slope. Once an organization gets a taste of the benefits of outsourcing one tower of IT service, appetites for further third-party provisioning naturally increase. Before long, the portfolio of outsourced IT work balloons, but the benefits begin to wane as the internal IT service organization grows anemic.

How much IT outsourcing is too much? That depends on the customer. But here are seven surefire signs you need to bring some work back in-house.

1. You have to bring in the service provider for CXO sit-downs: The CEO calls an all-hands-on-deck strategy meeting. The CMO wants to talk big data and analytics. CFO wants to re-examine IT's capital expenses. It's a bad sign if you have to drag your outsourcer with you to every important business meeting. "When they only way to supply strategic IT information to the C-Level suite is to invite the vendor staff to discuss it with them, you have given too much to the vendor," says Adam Strichman, founder of outsourcing consultancy Sanda Partners. "A good outsourcing contract preserves the right to control critical strategic issues and those affecting the core business," adds Brad Peterson, a partner in the business and technology sourcing practice of Mayer Brown

2. You're drowning in change orders: When even the most minor change requires major paperwork, chances are you've sent too much out the door. "Your governance team is powerless to do anything without going through a vendor approval process, so you often end up not bothering to make improvements as they take too long to implement and often cost too much," says Phil Fersht, founder of outsourcing analyst firm HfS Research. In such situations, IT organizations put off the adoption of important new technologies until their contracts are up for renewal, says KPMG's Le peak, putting them at a strategic disadvantage.

3. You've run out of meeting space: "When you need the company's largest conference room for the vendor management meeting & and suddenly, the largest conference room is not big enough,' says Strichman of Sanda Partners, you're outsourced to the hilt.

4. The transaction costs outweigh the benefits: It may sound like an obvious red flag, but the costs of managing an ever-growing portfolio of IT suppliers can sneak up on an outsourcing customer, says Stan LePeak, director of research for advisory services at KPMG. "This often happens because the customer has more suppliers than it needs to obtain the right skills and maintain competition," adds Mayer Brown's Peterson.

5. Key members of the IT leadership team have morphed into contract jockeys: Has the CIO begun to lament the fact that he never went to law school like his mother wanted? Not good. Other signs you need to pull back on the outsourcing, says Fersht: "You feel you have lost control over your operations and have merely become an administrative overseer. The people you want to hire to support you are not technologists, they are contract administrators. You need management accounting skills to improve your job, not more technology knowledge." And if your enterprise procurement group has had to staff up to handle the constant flow of RFPs and statements of work from IT, says Strichman, you've really gone overboard.

6. You can no longer answer fundamental technology questions: It's business continuity planning time. Your chief risk officer asks you where the company's data is actually stored, and you realize you have no idea. It sounds comically extreme, but Strichman of Sanda Partners says he's seen it happen in heavily outsourced IT organizations. And it's not funny.

7. No one's paying attention anymore to the outsourced work or you: When "there is no more room for taking out more costs through pushing more work offshore, and your vendor keeps going over your head to convince your bosses there are 'more FTEs' they can take out," says Fersht of HfS Research, the next one out the door might be you. When "your management sponsors are less interested in your outsourcing initiative -they've met their cost savings goal are have moved onto other initiatives," says Fersht, it's a sign that it's time to rein in the outsourcing strategy.


Latest Features

EDITOR'S PICK

Forecast 2015: IT Spending On An Upswing

As purse strings loosen up, CIOs blend innovation into 2015 IT budgets, but security and cost containment remain top priorities.

‘Security Compliance is Not a Proactive Phenomenon in India’

Pavan Duggal, Cyber Law Expert at the Supreme Court of India, explains why channel partners need to look beyond the IT Act 2000 as the security standards, given today’s fast-changing threat landscape, rapidly evolve.

IT is Indispensable for Business Optimization: David Aires, Intel

David L. Aires, VP, Information Technology Group, and GM, Information Technology Operations, believes security to be the biggest challenge in the current IT environment.

Is the CIO Role Nearing Extinction?

New technologies are shifting power to the hands of the user, endangering the CIO role. But do Indian CIOs consider that a threat or an opportunity? 

The Authentication Market is Big Play for Channels: Gaurav Chawla, Gemalto

We are building a partner network to address the increased demand for authentication solutions across India, says Gaurav Chawla, Director, IAM, Gemalto India.

Versatile Infosecurity: Riding the Security Wave

It takes vision and persistence to stay on top of the security curve. Versatile Infosecurity has mastered that art.

How Futurenet Technologies Helped Sterlite Copper Adopt Next-gen Client Computing

Sterlite Copper was able to successfully adopt next-gen client computing facilities with hand-in-hand assistance from Chennai-based Futurenet Technologies.

DigitalTrack Solutions: Right on the Security Track

DigitalTrack is keeping pace with the changes in the IT security space through DDoS and WAF solutions and is pushing security audits as part of its next move.

SLIDESHOWS

6 Leaders Who Headed for an Abrupt Exit

The abrupt exit of top leaders of Indian and global tech companies this year, with many of them citing ambiguous reasons, surprised the technology world.

Gartner Executive Summary Survey 2014

Gartner's Annual CIO Survey highlights the trends that will drive organizational IT spend in 2014.

10 Overhyped Tech Products That Crashed and Burned

The demos blew everyone away. Then reality hit.

Gartner Executive Summary Survey 2014

Gartner's Annual CIO Survey highlights the trends that will drive organizational IT spend in 2014.

ChannelWorld Survey: State of the Market 2014

Partners poll their sentiments, expectations, pain points, and challenges for the coming year.

FAST TRACK

Mudra Electronics

A vendor-agnostic strategy helped us sustain business, says Bharat Shetty, CMD, Mudra Electronics.

Systematix Technologies

Our USP is a customer-friendly approach backed by services, says Akhilesh Khandelwal, Director, Systematix Technologies.

CorporateServe Solutions

Our ability to turnaround complex ERP projects in record time is what gets us customer referral, says Vinay Vohra, Founder & CEO, CorporateServe Solutions.

KernelSphere Technologies

We are emerging as an end-to-end systems integrator, says Vinod Kumar, MD, KernelSphere Technologies.

Uniware Systems

We constantly validate emerging technologies for first-mover advantage, says Vergis K.R., CEO, Uniware Systems.

Astek Networking & Solutions

An innovative approach helps us stay successful, says Ashish Agarwal, CEO, Astek Networking & Solutions.

CSM Technologies

Our approach is backed by innovation and simplicity, says Priyadarshi Nanu Pany, CEO, CSM Technologies.

ETSC Computers

We want to be recognized as a complete solution provider, says Kailash Gupta, Director, ETSC Computers.

VIDEOS

Arun Parameswaran on VMware’s Cloud, Mobile, SDx Strategy

Arun Parameswaran, MD, VMware India, talks about transformation, strategy, roadmap, and VMware’s role in driving the shift to cloud, mobile, and SDx.

Parag Arora, Citrix: Our Portfolio Will Augment Our Strategy

Parag Arora, Area Vice President, Citrix India, elaborates on his action plan for the company after taking over operations in India.

Shibu Paul, Array Networks: ADN is a Great Business Opportunity for Channels

Shibu Paul elaborates on how Array Networks is empowering its partner ecosystem to address the modern datacenter challenges in India.

Scott Robertson, WatchGuard: We are an End-to-End Security Solutions Company

Scott Robertson of WatchGuard elaborates on the company’s partner roadmap in India and its subsequent shift in the security space.

Gaurav Ahluwalia, R&M: Channels Will Accelerate Our Datacenter Business

Gaurav Ahluwalia of R&M speaks on the company’s renewed focus to build its channel ecosystem and address the datacenter demands of India Inc.

Venkat Murthy, 22by7 Solutions: Real Value is in Solutions

Venkat Murthy, Prime Mover, 22by7 Solutions, elaborates on the need to look at a solutions approach rather than a mere hardware approach.

What Channel Partners Can Learn from a Sahara Adventurer

Steve Donahue, a desert adventurer and a best-selling author, takes experiences from this travels in the Sahara and turns them into lessons for channel partners, as they navigate the shifting sands of today's business and IT environment.

Rahul Agarwal, Lenovo: Profitability and Value Proposition are Vital

Rahul Agarwal, executive director, Commercial Business Segment, Lenovo India, talks about Lenovo’s renewed channel strategy and why the company is now an attractive proposition for its partners.

EMC PARTNER SHOWCASE

Partnering for Profitability

Atul H. Gosar, Director, Network Techlab, shares how the company’s association with EMC has provided it with a competitive edge and a wide customer base, leading to increased profitability.

Sponsored Content

Promising Pipeline

Venkat Murthy, Prime Mover, 22by7 Solutions, shares how EMC brings in competitive edge by enabling technology, GTM and lead generation, helping 22by7 acquire new customers and retain old ones.

Sponsored Content

Powerful Performance

Deepak Jadhav, Director, VDA Infosolutions, says initiatives by EMC around training and certification have helped the company’s staff improve its performance and enhance customer experience.

Sponsored Content

Performance Booster

Rajiv Kumar, CEO, Proactive Data Systems, says that the solution provider’s association with EMC has helped expand its customer base and added value to existing offerings.

Sponsored Content

Pursuit of Profitability

Santosh Agrawal, CEO, Esconet Technologies, shares insights on how the systems integrator’s association with EMC has spelled sustained success over the years.

Sponsored Content

Non-Performance is Not an Option

Nitin Aggarwal, Director, Trifin Technologies, shares insights on how the association with EMC has helped the system integrator stand out and empowered its personnel to deliver consistent performance.

Sponsored Content

STRATEGIC DIRECTIONS 2014

Driving IT to Make an Impact: IDC

IT is being increasingly viewed as something which would help drive revenue rather than just another cost line-item.

Software-Defined Infrastructure: Forrester

Firms must invest in transforming infrastructure to eradicate complex infrastructure to keep pace with business needs.

Better Safe Than Sorry: PwC

Organizations should create a culture of security that starts with commitment of top executives and cascades to all employees and third parties.

New Skills for a New Era: Gartner

A new talent strategy is required—one that is a key part of the evolving IT strategy and one that focuses on a blend of business and modern IT skills.

The Rise and Growth of Big Data: Ernst & Young

Leading organizations are reaping rich rewards on their investment in big data even as competition struggles to keep pace.

SOCIAL MEDIA @ CW India
SIGNUP FOR OUR NEWSLETTER

Signup for our newsletter and get regular updates.