Friday, June 03, 2005

Offshore outsourcing benefits

Predictions depict that outsourcing is poised to grow substantially: AMR Research says the number of IT companies that outsource will jump from 20% to 50% in three years. The reason for the dramatic growth is quite simple: Cost savings from offshore outsourcing are too compelling to ignore. The more aggressive a company's outsourcing strategy, the more money it can save. Unfortunately, risk increases along with savings.The lure of offshore outsourcing is particularly remarkable because so much money can be saved. Also, the dynamics of offshore outsourcing are changing rapidly. With the help of improved VPN technology, some IT managers are finding offshore operations that failed just three years ago can often be implemented relatively painlessly. Network advances in security, leased lines, and storage all contribute to making offshore outsourcing painless for the experienced IT manager who may have a tight budget. The applications that seem to be most successful in offshore outsourcing are generally the easiest computing tasks--for instance, payroll, human resources, and benefits. Conversely, more complex work-- ERP environments such as SAP and PeopleSoft--are more likely to fare better when kept in house. Obviously the strategically important IT tasks should remain in house. When an IT installation takes advantage of the repertoire of outsourcing available, many IT budgets can be cut by 40%. It won't always be easy, but it will be worth it in the long run.