Saturday, March 6, 2010

Who's to blame when Outsourcing goes wrong?

I don't have a problem with outsourcing. After all, every piece of IT consulting work I do is a form of outsourcing which the customer could have done in-house if they had wanted to invest in hiring an employee with the same skills I have. Unsurprisingly there are some outsourcing projects which go belly up and wind up in the courts with vast sums of money expended on lawyers and occasionally a payout from an IT company to the angry customer.

This article summarizes a report on the pitfalls of outsourcing with a particular emphasis on where the customer could improve their game. Yes, those wonderful clients who pay our bills sometimes make a mistake. Here's some high points from the article.
  • " a significant minority of respondents felt they were not “close enough to the business” to give a definitive view as to the main commercial driver [for outsourcing] ."

  • "... less than one third of respondents said they regularly involved business sponsors in the [outsourcing management] teams... "

  • "In addition, 38 per cent of respondents said sourcing team members were often expected to progress the procurement alongside their “day job”."
And best of all (my bolding)...
"Most customer respondents wanted to form a “strategic partnership” with vendors supplying business critical systems over the longer term, but there was no consensus on what that meant and relatively few customers felt such a relationship could be mutually beneficial. From the vendors' perspective, the ubiquitous “strategic”, “partnership” or “alliance” label was too often meaningless or didn't match the reality of an aggressive procurement with a customer only interested in hammering down price or securing robust contract terms."
Well that's the vendor's perspective, but I'm sure we've all met customers like that. Outsourcing can be useful when it's selective and carefully researched however it can also be a bottomless black hole soaking up management time and money and severely annoying your remaining IT staff. I'm not surprised by what I read in the article.

This is a report about IT in Australia and maybe things are different in the US or the UK... but I doubt it.

1 comment:

Anonymous said...

Upper management makes the choice to go "cheap", they should take the responsibility. They often try to "push" it down. Because after all the real reason is to slash salaries.