1. IT Outsourcing Management
Dr. Kishen Iyengar

2. What is Outsourcing?
Outsourcing is the transfer of ownership and responsibility of a functionality from a firm to an other legal entity.
Outsourcing has been around for decades, especially in non-core activities.
IT outsourcing to firms based in other countries is referred to as offshoring; If the provider is in the same country it is called onshore outsourcing

3. IT Outsourcing
Where American and European Companies source from (source – Weissman Center)
India
90%
Philippines
17%
Central/South America
13%
China 9%
Singapore
Ireland 5%
Eastern Europe 4%

4. Benefits of Outsourcing
Cost Benefits – lower manpower costs, reduced capital costs, on-demand teams
Business and Organizational Benefits – faster time to market, risk migration, ability to focus on core competencies, improved processes
IT outsourcing may involve any activity in the IT organization including routine processes like desktop support, hardware and network maintenance, or complex functions such as implementation of ERP

5. Outsourcing Process

6. Questions in the IT Outsourcing Process
What function do I need to outsource?
What are the risks involved?
Who do I outsource to?
What are the terms of the outsourcing contract?
How to decide if the outsourcing contract is a success, Did it meet expecations?
Should I renew the contract?

7. What functions to Outsource?
Require minimal client or end-user interaction
   Have mature features and stable well defined requirements
   The process is standardized, repetitive, well segmented and documented
   Do not involve secure or sensitive data
   Large enough to produce substantial benefits
   Low added value or labor intensive
   The application/process is stable with a reasonable expected life time
   Low operational complexity
   Low to medium business criticality

8. Risks? Country Criticality Employee motivation Others?
After risks are considered, you may invite other parties to submit their proposals by issuing an RFP

9. Who to Outsource to?
When you are deciding between multiple vendors, you may want to look at certain aspects of each vendor to help you decide.
Reputation
Management
Markets and Clients
Staff
Technology and Process

10. Reputation The reputation of our company is very good
We have a detailed, written business plan
Our business plan is extensively used as a management tool
We have a high priority to export our services
Everyone in our company knows our priority to export our services
We help each other within our company (also between departments)
We believe in professionalism and commitment

11. Management
The top management has a high level of technology understanding
The management is willing to change
We have a professional management team
The management is highly motivated
The management provides leadership
The management is focused
Our management has an open style

12. Markets and Clients We have a strong client base in the US
We know the EU market very well
We have a professional marketing team
We have a well defined and clearly communicated selling proposition
We have capacity to carry out projects for foreign clients
We have professional printed marketing material
We have a professionally designed web site
Our clients are highly satisfied with our services
We have a strong reference list
We know that we are very price competitive

13. Staff Our company has a strong technical staff
Our staff is highly motivated
Most of our people are certified (Microsoft, Cisco, Linux, etc)
Our company offers an extensive employment benefit package
Our staff participates in training regularly
Our staff selection process is formal and well documented
We evaluate our staff regularly
Our staff evaluation process is formal and well documented
We maintain a less than 10% annual staff turnover

14. Technology and Process
We have several R&D programs running in our company
We add new technologies to our technology portfolio regularly
We have a fully defined and documented software engineering process
We have a fully defined and documented project management process
We have a fully defined and documented QA process
We handle requirements changes very flexibly
We master requirement engineering practices
We plan all of our projects in great detail
We have a web based project monitoring system
We have a formal quality certification (CMM, ISO, etc)
We constantly improve quality assurance and key processes
Our on-site security is up-to-date