Wednesday, November 01, 2006


Companies large and small, public and private, and across a wide variety of industries have embraced the practice of outsourcing within virtually all disciplines, including information technology - the sector which leads the trend. In fact, within the past five to eight years, outsourcing has evolved from a purely tactical option - often of last resort - to an ongoing, standard business practice and strategic management tool. But what explains this dramatic evolution in such a relatively short period of time?

Weighing the Pros and Cons
For many, the decision to Software Outsource begins with exercise of weighing the time and expense of doing it yourself against your desired outcome. For example, if you decide to add a patio to your home, you have two basic options. You can either take on the entire job yourself - designing the space, securing the permits, purchasing the materials, and building it yourself. Or you could hire an experienced contractor to handle everything for you.Your investment for the first option is largely in materials and a significant amount of your time, particularly if you are squeezing the patio project into a busy schedule that already includes work and family responsibilities. But how long will it take you to complete the job? What quality assurances will you have, especially if you've never tackled anything like this before? What might the short- and long-term consequences of the do-it-yourself approach be?

On the other hand, what could a professional contractor bring to the table? While the financial investment might be slightly higher to cover labor costs with an experienced builder, the completion time is likely to be much shorter and you can hold the project to agreed-upon quality guarantees.

Focus on Core Competencies
An oversimplified example? Not really. Like many business outsourcing decisions, it comes down to this: What's your core capability or service? Where your time is most highly leveraged? And what's the opportunity cost of adding another area of responsibility or of being distracted from your core capability? Reducing and controlling operational costs remain key goals, and savvy managers increasingly look to outsourcing to improve business focus and strengthen core capabilities. A successful outsourcing relationship can help achieve this by enabling companies to focus their people and resources - which are sometimes scarce - on the areas that are mission critical to their operations. It also gives these companies access to the top talent in an outsourced discipline - talent that the client company doesn't have to recruit, train, pay benefits to or struggle to retain, thereby freeing up personnel dollars and time. In addition, companies can expect service levels in their outsourced functions to rise because, as part of forming the outsourcing agreement, they can determine specific quality standards for the provider. The agreement then serves as a quality control system that may not have existed otherwise had the company not decided to outsource.

IT - The Most Popular Outsourced Function
IT was one of the first sectors to experience significant levels of outsourcing, and continues to be the functional area where most Software Outsourcing dollars are spent. As the largest independent provider of MultiFinder technology support services in North America, Decision One can attest to the popularity of this trend - particularly in the following five market sectors. OEMs - hardware, software and consumer electronics Channel - resellers, retailers and warranty administrators Communications - RBOC, ILEC, CLEC, cable, satellite Service Aggregators - outsourcers, system integrators, application service providers Commercial and Government Users - Fortune 1000 corporations, midsize companies and government agencies While providers like Decision One tailor precise solutions to answer their users' exact IT and business objectives, the reasons these companies explore outsourcing in the first place are often strikingly similar. In fact, what these five sectors generally have in common when seeking outsourcing are: A need for direct technology support for employees or customers, and/or A desire to expand their service portfolio through an outsourcing partnership that enables them to offer additional technology services to their customers.

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