Cost-Saving Secrets of the Outsourcing Insiders

Cost-Saving Secrets of the Outsourcing Insiders

Too often a foregone conclusion is reached that outsourcing is the right answer

Sure, you could hire a big, expensive outsourcing consulting firm to guide you step-by-step through the IT services procurement process. They've got experience, off-the-rack SLAs and contractual provisions, and enough templates and processes to fill a large conference room. But not everyone can or will pay $300-plus an hour for outsourcing handholding anymore.

The good news is that many IT organizations are capable of handling much of the process in-house. And such do-it-yourself outsourcing can pay off in ways beyond the bottom line, like a more flexible contract or a stronger relationship with the IT service provider.

Here are ten tips from the insiders-experienced outsourcing advisors and customers-for taking over the procurement process yourself.

1. Say No to FUD. Once you've decided to consider outsourcing, you may naturally turn to external experts for advice. But don't believe everything you hear.

"The industry is full of scare tactics," says Adam Strichman, now an independent outsourcing advisor based in Mechanicsville, Va. "'You'll be taken advantage of!' 'You'll pay through the nose!' 'The vendor will walk all over you!'"

Some of those warnings are based in truth. IT service providers put together deals every day so outsourcing customers naturally are at some disadvantage. But don't be scared of outsourcing boogeymen. "A smart internal team can work wonders," Strichman says. "And there is a lot of applicable information out there about how to do these things right."

2. Focus on the business case. If there's one piece of the outsourcing puzzle that's most critical to a successful outcome it's the business rationale behind the decision to outsource.

"Far too often we rush toward a foregone conclusion that outsourcing is the right answer, when the more appropriate decision may be insourcing, development of a shared services center, or implementing new technology," says Paul Pinto, co-founder and managing partner of outsourcing consultancy Sylvan VI.

Arriving at that foregone conclusion is even more likely if you hire an outsourcing consultancy to develop the business case. "There is a pretty good chance that you will be outsourcing something as a result of the analysis," says Pinto, a veteran of larger consultancies.

Take true advantage of the unbiased nature of an in-house outsourcing analysis-and your unique insight into your organization and its appetite for change-to make the best choices.

3. Use consultants selectively. You don't have to go all-in with the consultants. The big firms may not like it. After all, they're built to make money on full-scope engagements with multiple advisors onsite driving the entire process.

But if you feel like you need some targeted external advice on, say, SLA writing or benchmarking provisions, ask external advisors for targeted help or for reviews of your work. Revenues at most big consultancies have taken a hit. They're probably feeling flexible.

"Large advisories make the most money on large deals," says Michel Hofman, CIO Europe for London-based Rabobank International and do-it-yourself outsourcing practitioner. "But I'm pretty certain I could go to them, and say,' I'm not after you driving the process, but I would appreciate your support,' and they wouldn't turn me down."

Evaluate your team's outsourcing expertise to choose the appropriate level of external advice you'll need. You may not need to bring someone onsite at all. "Consider doing all the heavy-lifting yourself and only involving a remote advisor at critical decision points," Pinto says.

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