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Outsourcing it the Right Way 2013

Debarati Roy | Jan. 21, 2013
If you are among the 48 percent of CIOs who, according to the State of the CIO Survey, are planning to invest in outsourcing significantly in the coming year, it is likely that you will find that phrase under your breath quite often in the near future.

"How much is enough?"

If you are among the 48 percent of CIOs who, according to the State of the CIO Survey, are planning to invest in outsourcing significantly in the coming year, it is likely that you will find that phrase under your breath quite often in the near future.

However, more than just quantity, it is also a question of quality. Because, contrary to commonly held notions, outsourcing is not the end of all your problems.

"Sourcing is a business tool. And most CIOs don't realize that finding the right vendor, nabbing the perfect deal, and making a sleek SLA, is not the end of it. It is just the beginning," says Siddharth Pai, partner and president, ISG Asia Pacific and an outsourcing consultant.

Experts like Pai believe that the coming year will see some new trends emerge and some old philosophies becoming redundant. This makes it prudent to re-look at what constitutes your outsourcing strategy.

One thing has become clear, outsourcing isn't about lowering costs. "The established view was that you need to have a large cost differential. However, in India there isn't much offshore cost advantage to be had," explains Pai.

According to the survey, 57 percent of CIOs believe that smart sourcing will help them gain access to world-class capabilities, 63 percent believe that it will allow them access to new technologies or services without having to worry about the associated challenges of skill set acquisition and retention. Cost savings, which used to be synonymous with outsourcing, has slipped to third position, with only 53 percent of CIOs citing it as a reason to outsource.

Thankfully more CIOs are becoming aware of the fact that cost arbitrage is a complimentary benefit and should not become the focus of an outsourcing strategy.

"With disruptive technologies like the cloud, virtualization, mobility and big data, outsourcing's biggest strength is that it will help you to gain capacity, capabilities and scale. It helps the CIO handle strategic imperatives, and lets partners handle commoditized services," says Pai.

Your preferred reason for outsourcing could be any of the above, but the one thing that most CIOs and experts agree upon is the fact that it's not done easy. The decision to outsource will keep your nose to the grindstone. But a little help from the experts can definitely help.

Towards that end, here are the eight commandments of outsourcing.

Be value driven, not price driven. Most CIOs want more from their partners than just a quick boost to the bottom line. Daya Prakash, head-IT, LG, believes that saving costs shouldn't be the primary motive of an outsourcing strategy. CIOs should not be looking for vendors or service providers but strategic partners who can help them innovate, and give them more business flexibility.

 

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