Saving money has always been one of the drivers for considering outsourcing, but it usually fell behind more strategic motivations, such as focusing on core competencies or freeing internal staff for other initiatives. However, in these tighter economic times, more companies are turning to outsourcing as a means to reduce and control IT costs.
Is it possible to save money through outsourcing? Of course! Are you guaranteed to save money if you outsource? Of course not! Can you save money by copying the methods used by outsourcers within your organization (insourcing)? Maybe, maybe not!
To a large degree, your ability to save money depends on the structure of the deal and the experience of the outsourcer, but willingness to accept change is perhaps the most important factor. It’s important to remember the old adage, "Doing the same things with the same people in the same way gets the same results." To which we can add "for the same or even higher costs."
Gaining cost savings is not rocket science; it’s a matter of using resources more effectively.
How can you lower resource costs? Identify what level of support you and your company really need. Do you need a full-time programmer? Do you need a full-time engineer providing Help Desk support. In some cases the answer is clearly 'yes'. But in others the answer is not so clear.
Outsourcing providers can deliver flexibility in line with demand, something in-house teams may find difficult. Leading service providers combine strategic thinking with cost reduction.
Today, measuring return remains the most important factor when embarking on new IT projects. Service providers should work with firms to establish goals and outline timeframes for their completion. Businesses worried about potential risk can ask IT providers for a period of time pricing model, (traditionally a year) rather than simply committing to work on a certain project. This guarantees a working relationship over time that starts a partnership between two companies.
The best service providers will have already adapted to meet the demands of the new world order marrying the traditional priority of cost reduction with the business transformation required to drive performance in the years ahead. Businesses should use the downturn to forge closer, tightly defined relationships that can reap benefits now and in the future.
If pursuing outsourcing is your method of choice, find an experienced outsourcer who is willing to contractually guarantee their commitment to you with a defined time period. Remember, significant cost savings cannot be achieved without significant changes to the current IT environment.