Despite the hard times, there is an optimism in the sphere of development outsourcing about the raise in IT deals, driven by enterprises searching to improve efficiency and cut costs. The character of those deals will change in favour of short-term deals rather than long-term contracts, according to Gartner. However, customers in their cost-cutting haste risk to cut the wrong corners, ending up disappointed with the results.
It’s time to be wise and accurate when it comes to outsourcing strategies. Here are some recommendations to pay attention to in order to benefit from an outsourcing deal.
- Have clear scope.
Make a thorough assessment of your entire IT portfolio and clarify what you can outsource and what should not be outsourced. Do it before starting the outsourcing selection process. - Think about a multi-sourcing strategy.
You may gain more by signing on a small stable of preferred providers instead of a single vendor. In addition, this will help mitigate risk through redundancy and provide access to a broader or deeper talent pool. - Connect your service lines.
Provide for reinvesting savings in one line of service into spending on another line of service. Make it mentioned in the contract. Thus, you will be able, if necessary, to move your infrastructure savings into innovation or transform them in another area. - Make the vendor provide for cutting costs in the future.
Include a contractual provision that obligates your outsourcing provider to reduce costs and charges in the future. - Employ new delivery methods.
There are plenty of multi-tenancy, pay-per-use options available today that may lower your IT costs – software-as-a-service, virtualization, cloud computing, infrastructure on demand, etc. Think over the possibility to use them. - Be simple.
Diligence in outsourcing negotiations is important, but try to avoid over-engineering the contract. - Don’t consider your current provider to be your eternal partner.
This may seem convenient to sign a new deal with your old provider; however, it can turn costly in the longer term. Why not looking for the best provider for a new function you want to outsource? Your existing partner may not be the best-or most cost effective-choice. - Fight for your rights.
Provide for an audit or a third-party benchmarker in the contract. While this may not make your provider happy, retaining these rights gives you pivotal leverage in the partnership. In addition, invest in outsourcing governance software to ensure you are able to evaluate provider’s performance. - Think about a managed services model.
Spend some time to determine the appropriate engagement model for your next outsourcing deal. Many outsourcing customers prefer moving to managed services deals. In the managed services model, the customer pays for IT services themselves at pre-agreed rates, rather than paying for man-hours of labor.
