It Outsourcing: Maturity Phase By Shaun Parker At Isnare.com Ezine Articles

As I was surfing the Web the other day, an expressive headline caught my attention: "Outsourcing is stupid". I looked through the article by Alan Fisher, co-founder and Chairman of Iron Speed, Inc., only to find out that "outsourcing is stupid when you can do the work cheaper at home." Ironically, this anti-outsourcing truism sounds to me pretty much the same as the first rule of outsourcing (as I formulate it): outsourcing is the best solution when you don't possess enough in-house expertise and/or budget for an IT development project. It's great when you can afford to develop in-house everything you need, but what if have to retrain your employees or hire new ones, pay for re-equipment, and deliver a project against a tight deadline? I'm afraid your choices are limited to giving up or resorting to the outside expertise. No wonder the notorious drawbacks of IT outsourcing and criticism from the general public don't seem to affect the scope of this omnipresent phenomenon.

New Opportunities - New Relationships

According to 2004 IT Outsourcing Study conducted by DiamondCluster International, 86% of Global 1000 IT executives and providers of IT outsourcing services who participated in the study expect outsourcing to further increase next year. Moreover, outsourcing is more than simply cost savings now. "While reducing costs is still the number one reason fueling the outsourcing trend, another key factor is that companies are looking to free up internal resources to focus on more critical initiatives," says Tom Weakland, who leads the outsourcing advisory services practice at DiamondCluster International. Globalization creates new opportunities for those businesses that know how to establish sophisticated and interdependent relationships with their offshore vendors. These "enhancement" and "frontier" relationships, as Gartner calls them, are typical for the maturity phase of IT outsourcing.

Offshore Dedicated Team

At its maturity phase, outsourcing advances beyond the conventional project model: offshore vendors provide their customers with exclusive full-time dedicated resources on a long-term basis. An Offshore Dedicated Team (ODT) customized to the customer's requirements, practices, and even culture operates as an extension of the in-house staff. The ODT model sets the customer free from such problems as incorporation, recruitment, office lease, infrastructure set-up and maintenance. Using an ODT, a business can reduce development costs, get access to specific skills, gain better control over the entire development process, achieve easy scalability, and have the accumulated expertise transferred back in-house.

Microsoft, Intel, Sun Microsystems, IBM, Dell, Motorola, and other major IT corporations have been using offshore development centers for years. By outsourcing work to their offshore centers, these companies advance their technologies, obtain substantial cost savings, and at the same time allow their in-house teams to concentrate on their core tasks.

Nowadays, an increasing number of mid-size businesses outsource large-scale and/or continuous projects to offshore dedicated development centers and teams. Such projects involve custom software development and/or maintenance, R&D, testing, QA. The time of operation of an ODT is normally six months or more, otherwise the invested time and effort don't pay off.

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