Whether any future U.S. jobs bills will contain anti-offshoring measures remains up in the air. But outsourcing customers don't have to wait to protect themselves from potential protectionist legislation.
It's always a good idea to benchmark your outsourcer's prices periodically against the market. But what if you find that your IT service provider's rates are too low?
Two major trends led to lower prices for outsourced IT services last year--the global economic downturn and the uptick in remote infrastructure management (RIM) adoption.
The economic downturn has taken its toll on the IT services industry, and consequently, on the consultancies that swelled to support corporate outsourcing efforts in better days. Over the last two years, everyone--from the IT outsourcing arms of the biggest general business advisories (the KPMGs and Accentures, for instance) to the consulting divisions of IT service providers (the IBMs and HPs) to the leading outsourcing-specific consultancies (the TPIs and Alsbridges)--has been hit with layoffs, consolidation and upheaval.
In the realm of IT outsourcing, disengaging from a multi-year, multi-million dollar agreement can be so difficult and costly for customers that it makes a Trump divorce seem like a tea party. But that's exactly what Kellwood did last year, despite the upheaval the company anticipated from ending its 13-year IT outsourcing arrangement with EDS.
In what could be an important decision for the IT outsourcing industry and its customers, a London court recently ruled that EDS (now part of Hewlett-Packard) must pay damages to a former outsourcing customer for failing to live up to its sales pitch.
Everyone knows a good outsourcing relationship needs to be actively managed. So does a good IT outsourcing contract.
Middle management just isn't what it used to be. The old definition of a middle manager--those senior staff in charge of overseeing the details of day-to-day management and reporting to top management--is too narrow, says Leslie Willcocks, Professor of Technology Work and Globalization at the London School of Economics (LSE) and head of its Outsourcing Unit.
If there's one skill that usually gets short shrift in giving up-and-coming leaders valuable on-the job-experience, it's negotiating contracts with external partners. In some large corporations there are so many parties involved in forging vendor relationships--from internal purchasing organizations and general counsel to outside consultants and advisors--that it's difficult for budding IT leaders to get any experience in edgewise. In smaller organizations, top IT brass may cleave so closely to the contracting and management process for fear of losing money or putting the company at risk that they lock their next generation out of the process.
The Project: Deploy mobile communications software to enable transmission of live video to and from the Port of Los Angeles' control centers and harbor police in the field. The project is part of a $4.2 million integrated command console system designed to improve security responsiveness at the nation's busiest cargo port.
Researchers at the University of Tennessee have studied a variety of outsourcing deals-from IT and back-office work to manufacturing and logistics-and identified the most common mistakes organizations make when partnering with an external provider.
When it's time to outsource, selecting the right outsourcing advisor may be the single most important decision you make-one that sets up your future relationship with an IT services provider for success or failure. Given that IT outsourcing transactions are complex and vendors are savvy at setting them up to their advantage, solid sourcing advice from a third party can help to level the inherently uneven playing field, particularly for less experienced IT services buyers.
It was a long year of intense ups and downs in the IT outsourcing industry. Consolidation among vendors and interest in remote infrastructure management increased, while overall outsourcing demand and IT services pricing decreased.
Multisourcing, or spreading work among several service providers, can offer many advantages to IT shops, from competitive pricing and increased flexibility to access to a deeper pool of talent. But working with multiple vendors can also mean exit costs are multiplied if the arrangement doesn't work out, warns Bob Mathers, principal consultant with Compass Management Consulting.
Outsourcing prices dropped overall in 2009, and industry watchers expect the downward trend to continue next year. It's not just the global economic slowdown that's sending IT service prices south, it is also the increased use of offshoring, pricing pressure from customers, and a reduction in vendors' services.