Outsourcing IT functions to a global sourcing provider is an attractive option for executives, as it reduces costs and allows the company to focus on core competencies and reallocate resources.  There are definitely many benefits to global sourcing and an outsourcer can profit from such a relationship.  One of the major concerns of global sourcing is the loss of business knowledge.

Within the IT sector, knowledge commonly resides with the developers of the applications.  This knowledge often gives the company a proprietary and competitive advantage.  The IT industry is heavily reliant on innovation and new technologies.  If this knowledge is lost or if control is taken away from a process, it can be detrimental to the organization’s success.  There are ways to protect knowledge when using a global sourcing provider that should be considered by outsourcing companies.

Before a company begins global sourcing, the executives and managers need to determine what information is essential to the organization.  The first question to ask would be, if the work was outsourced, would the company lose part of the knowledge associated with that application?  If the knowledge was lost, would it negatively impact the company and outweigh the benefits of global sourcing, such as cost reduction?  These questions will help determine what processes and applications are essential to the company and which are not.  A core process or application should be kept in-house to avoid the risk of knowledge loss.

A company looking to outsource may consider creating a knowledge management team who will evaluate, through a thorough analysis, what knowledge is vital to the organization and what can be outsourced.  The team can also make sure that knowledge flows to more than one key employee, so that the knowledge will not be kept with just a single developer.

If it is determined that certain processes will contain vital knowledge among the developers, then an outsourcing company can minimize this risk by global sourcing only small functions to various service providers.  The outsourcer would only have to provide the supplier with information on that particular process, thus avoiding the potential loss of knowledge.

By taking measures to keep vital knowledge in-house, an outsourcing company can take advantage of global sourcing, while still protecting essential information.  A&E Consulting will be able to advise you on which processes and applications should be outsourced.  We will assist you in choosing the right global sourcing partner and establishing the business relationship.  In addition, we will manage the first outsourced project to make the transition as smooth as possible.

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