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Extreme Outsourcing

Extreme Outsourcing

The days of lump-sum outsourcing deals and blunt offshore labour arbitrage are gone. The future is about disaggregating IT processes — and then figuring who is best equipped to handle them and where they are located. Here’s how to do it right

The End of the Billion-Dollar Outsourcing Deal

Understanding your IT department at this level also makes you a better outsourcing customer. Rather than taking large pieces of IT and outsourcing them to one vendor in a megadeal that essentially marries the company to that partner, CIOs can use the insight they gain from the analysis to find the right partner for specific processes and tasks. In fact, Boehme suggests that CIOs should have at least two partners, and make them compete for your dollars.

Jimmy Harris, managing director of infrastructure outsourcing for Accenture, agrees, although he warns of a few potential problems. First, he says, it isn't a good idea to divide a process between vendors, despite some vendors' claims that they can work together. Also, he says, CIOs should not spread out the tasks that form a particular process too broadly, because it just adds complexity. Workers are less motivated because they feel as though they have less invested in the final product. And, he adds, "If you have to engage in thousands of low-level communications because you broke up the work at too fine a level, you are going to lose stuff."

In fact, in order to combat the complexity that comes from spreading your IT processes and tasks around the world, some CIOs have created a high-level position to keep track of outsourcing vendors and the projects that they are working on. "It's an emerging function that may not have existed at a global level before," says ABN Amro's Rosenthal. "Vendor management becomes much more important now. [Having that group] helps us facilitate business decisions in ways that we didn't have to before." Applying this kind of methodology to your IT operations will let you see what components of your organization can be moved. By tapping into the skills network that outsourcing companies have built, you can react to new requirements faster. It's enough to let even the smallest companies act like a big company.

"We've been able to get our staff to move up the value chain," says Homa, reflecting on the impact that taking advantage of the new outsourcing world has had on his department. "It's allowed us to raise our game."

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