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Why Outsourcing?
Through outsourcing, an organization transfers full or partial responsibility for I/S results to an outside vendor while maintaining control of strategic and prioritization decisions. The decision to outsource can be fueled by a number of concerns: organizational effectiveness, costs and revenues, customer satisfaction, and access to a wider variety of resources. Conceived and executed properly, outsourcing is a partnership that brings organizations together for mutual strategic benefit.

As the information technology industry continues to keep pace with accelerating changes, outsourcing can sharpen an organization's competitive edge and allow it to focus on core business activities. Outsourcing improves out-of-control functions, reduces staffing demands, and provides access to a new pool of advanced skill sets and technologies, ensures shared risk and reward, makes costs more predictable, respond quickly to changing organizational priorities, and creates an improved and more consistent level of service.

Organizations embrace outsourcing for both strategic and tactical reasons. For successful outsourcing initiatives, organizations and vendors must:

• Have a shared value system and compatible cultures
• Commit to a benefit-based outsourcing contract
• Create measurable I/S performance through the establishment of I/S service level agreements that improve performance over time
• Develop a shared vision, strategy, and risk/reward incentive schemes
• Identify existing I/S costs, infrastructure requirements, and current technology refresh strategies
• Share access to research/knowledge capital
• Establish mechanisms among internal and external resources
• Define effective performance measures

Throughout the life of the relationship, organizations must emphasize clear communication and problem solving over cost containment, which will be a natural by-product of a successful outsourcing initiative. Full commitment of senior management and a tight focus on shared control and decision-making will help the organization and the vendor work through their differences and integrate their strengths.

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