Obtain the Benefits of Outsourcing without the Risks
“Do what you can do best and outsource the rest.”
– Tom Peters, legendary management guru.
Outsourcing has got a lot of flak in recent years, but in today’s globalized world, it’s a competitive imperative. As Lee Kuan Yew, founding father of modern Singapore, once said, “If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.” While outsourcing does result in some job losses in the short term, over the long run it’s beneficial to the economy in general and companies in particular by lowering costs and fostering innovation. Janet Yellen, Chief Economist to former US President Bill Clinton, said it best when she described outsourcing as “another form of trade that benefits the US economy by giving us cheaper ways to do things.”
However, successful outsourcing is easier said than done. As this white paper titled Balancing the Outsourcing Equation says, “outsourcing of business application development often times does not deliver the promised cost savings and in fact, frequently results in final products that are grossly over budget, delivered late and having missing or unusable features.” Among the different reasons cited for disappointment are losing sight of business objectives, scope creep and expensive rework costs.
So, how can this paper help? – “(It) explores the root causes of why outsourcing does not deliver on its promises, and offers an approach to eliminate these issues using a four-part strategy of processes, standards, practices and requirements management.” The paper recognizes the need to strike a balance between different aspects of outsourcing, such as how lower resource costs can sometimes compromise quality which can lead to extensive rework that can negate the earlier cost advantages. Effectively, it “summarizes an approach to achieving this balance through the careful definition and management of the outsourced contracts.”
While the design looks a bit amateurish and editing falls short on occasion, the content is quite good and merits a closer look. From identifying the various solution delivery activities to the gaps that may arise between requirements and results (and how to solve them), the paper is a comprehensive look at the outsourcing process and how to succeed in it. If you’re a decision-maker in a company that has outsourced any of its operations or is planning to do so, this is a recommended read.
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By Sourya Biswas