The article, “Multi-sourcing –Minimizes Risks Associated with Large Global Sourcing Contracts,” discusses some of the key benefits of smaller deals.  For example, it is difficult to find one vendor that can successfully provide a variety of services.  When smaller deals are made with multiple vendors, the IT company has access to a wider range of resources and expertise.  In addition, it is easier to sever an outsourcing relationship when there is a smaller deal, as the IT company can avoid becoming dependent on the vendor.

Shorter-term contracts help alleviate some of the anxiety associated with global IT sourcing.  The majority of IT agreements last anywhere from five to fifteen years.  With a shorter-term contract, IT executives can feel more comfortable knowing that if the arrangement is not what was expected or if outsourcing is no longer a good fit, they are not locked into a long-term contract.

The recent economic uncertainty has also caused more IT executives to take their time in signing outsourcing contracts, which has led to longer negotiation cycles.  Even though IT companies are looking for ways to quickly cut costs, a goal that can be accomplished with global IT sourcing, at the same time, these organizations are measuring the risks and benefits.

When an IT company begins considering global IT sourcing as an option to reduce costs and increase productivity, executives need to think about the goals for the upcoming year or more.  A quick decision should not be made just to reduce expenses.  Global IT sourcing has a lot to offer, but it is not a good fit for every company.  Once the decision has been made to outsource, it is difficult to come back from it if the firm changes its mind.  A global sourcing strategist can help organizations weigh the benefits and risks of global outsourcing.  Contact A&E Consulting, a full service consulting firm, at 661-200-3612 or info@AandEConsulting.com for more information.

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Before a company decides to outsource, the potential cost savings should be evaluated.  Often times, organizations do not include all of the costs of outsourcing when determining the total amount that will be saved by the arrangement.  For example, initial transition costs, travel expenses, license agreements and other expenditures associated with global IT outsourcing are often overlooked.  To realize the full cost savings of global IT sourcing, it is important to consider all expenses, including the initial “one time” costs.

A successful outsourcing arrangement will depend heavily on the vendor’s capabilities.  The global sourcing provider can make the difference of whether a project succeeds or fails.  Some of the criteria that should be considered when choosing an IT vendor include the location, employee qualifications, established security measures, industry expertise and communication infrastructure.  The global sourcing IT strategists at A&E Consulting have the knowledge and experience to help organizations choose the right vendor. 

Once a global IT provider is chosen, the contract should be carefully and thoughtfully drafted.  Most outsourcing engagements last for several years, which makes it crucial to obtain terms and conditions that are fair to both parties.  Expectations and requirements should be clearly defined in the agreement, along with key metrics to evaluate vendor performance.  Some companies like to include a risk and reward mechanism in the contract, which would also incorporate penalties if the vendor fails to perform the required tasks.  The final contract should include all of the agreed upon terms and conditions, so there is no room for ambiguity.

By taking these necessary steps, companies can work towards getting the most value out of global IT sourcing.  A&E Consulting is a full service consulting firm that has been successfully helping clients with their global needs.  For more information, call 661-200-3612 or email info@AandEConsulting.com.

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It is common for an organization to make a comparison between completing an IT project onshore versus offshore.  Cost is analyzed to determine if it would be profitable to send the work to a global sourcing provider.  Onshore costs are frequently inflated in this comparison.  For example, many IT managers assume that it would take the same amount of employees to develop a project in-house, as it would to send the project to a global sourcing provider.  However, for most companies, fewer employees are needed in-house due to the efficiency in areas like knowledge transfer, knowledge capture, environmental support and project coordination.

Many IT managers also make the assumption during the comparison that the work done onshore will be performed by newly hired internal staff.  This assumption inflates the cost of completing the work onshore, as most IT projects will be done by existing employees or contractors.

There are also hidden costs to consider when determining ROI in global IT sourcing.  It is easy to identify some costs associated with global outsourcing, such as labor costs, communication and IT infrastructure, but many of the other related expenses are not so apparent.  Some of these hidden costs include travel expenses associated with the onshore staff traveling to the global sourcing provider’s location, knowledge transfer, training and management of the outsourcing engagement.  Other hidden expenses that must be taken into account are the cost to retain work onshore and cost of the transitional team who will help in the transition of sending projects to the global sourcing provider.

A company looking to outsource to a global sourcing provider can calculate a realistic ROI by conducting an accurate comparison between having the work done in-house versus offshore and by incorporating the hidden costs.  A&E Consulting helps companies determine if outsourcing is the right strategic move.  The firm also assists with choosing the global sourcing provider and overcoming challenges related to outsourcing.

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Four areas of expected ICT growth were identified, which include the following:

• Sustainable IT
• Outsourcing services, managed and hosted services
• Information management tools
• Services that support mergers and acquisitions

“In particular, ICT solutions that shift costs from a capital to variable component, focus on productivity increases and cost reduction, and support organizational restructuring and acquisitions are likely to see growing demand,” says Andrew Milroy, ICT director at Frost & Sullivan. 

The report predicts that investments will be made in sustainable technology within existing infrastructure, such as virtualization, videoconferencing, thin clients and power consumption modeling, as these capabilities are able to reduce costs while increasing green initiatives.   A greater focus on variable costs is estimated to lead to an increase in popularity of software-as-a-service (SaaS) and hosted service models.

Business travel will most likely decline, which will create a greater need for conferencing tools.  These conferencing tools will also allow more employees to work remotely, which will reduce travel costs and emissions.  As a result, there will be new opportunities for providers of secure remote access solutions.

One of the major areas of expected growth among the ICT sectors involves IT outsourcing.   Many organizations are looking for ways to cut back on costs and IT outsourcing provides a way to accomplish this goal.  Plus, outsourcing to a global sourcing provider allows companies to better focus on core competencies and increase productivity.  Global sourcing providers are expected to reap the greatest benefits to this anticipated growth.  Frost & Sullivan cautions in the report that contract terms can be expected to fall significantly.  Companies can use the advice of experienced IT outsourcing consultants to ensure that the contract terms are in their favor.

The authors of the Frost & Sullivan report believe that there will be new opportunities in both traditional and non-traditional areas of managed services, including managed handsets, network services and leasing services.  According to the report, there should be an increase in mergers and acquisitions as the economy continues to weaken.

Based on this Frost & Sullivan report, it is safe to assume that a slow economy will benefit some areas within the IT industry, while negatively impacting others.  Global IT sourcing is a great way to lower costs during this economic slowdown.  A&E Consulting helps organizations weigh the benefits of outsourcing and also assists in choosing the right outsourcing partner.  The consulting firm will even oversee the first outsourced project to ensure a smooth transition.

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A statement of work is a document used to solicit proposals from global sourcing providers and is usually included as part of a Request for Proposals.  It describes the work that is needed and generally includes a timeframe as to when the project must be completed.  Vendors will respond to the statement of work with a proposal and cost estimate.  Buyers can then choose the most qualified vendor for the project.

Creating a statement of work is not an easy task and can be time consuming.  However, it is well worth the effort as it is fundamental to the success of the project.  A statement of work must be specific and clearly outline the work that is to be done.  If a statement of work is too ambiguous, it can lead to misinterpretation and future problems.  IT managers therefore, must take the necessary time to draft this essential document and ensure that it is detailed.

There are many items that should be included in a statement of work.  The scope of work required and the time in which it should be performed should be defined.  Hardware or software that is to be used should also be mentioned so that vendors know what is expected of them.  A statement of work generally discusses the location of where the work is to be completed and the allowable time for projects.  It should incorporate a schedule for specific deliverables.  If there are any special requirements, such as security clearance, necessary skills or travel requirements, it should be outlined in the document.

A statement of work might also include criteria for defining a project’s success or failure.  Defining success can be especially helpful in eliminating potential misunderstandings between the buyer and vendor.

When reviewing proposals from vendors, IT managers should evaluate the vendor’s plan for performing the required work, the skills of the vendor’s employees, performance history and price.  All of these factors are equally important and each one should be considered when choosing a vendor.

For more information regarding statements of work, contact A&E Consulting at 818-572-8399.  A&E Consulting assists companies looking to incorporate global IT sourcing into the overall business strategy and will help oversee the first outsourced project.

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When searching for a vendor, there are certain criteria that are considered when choosing a company.  One of the main factors that should be included in the decision process is the vendor’s data security policies.  There should be clear, enforceable policies in place and the access controls should be identified.  Many of the larger vendors will have certifications showing that information security practices are upheld.   Some firms will have obtained the ISO 27001 certification, which means the company documents and follows information security practices and controls.

It is important to find out how the vendor enforces access controls and how these controls are updated when employees change jobs or leave the company.  Some vendors will offer to provide development on a dedicated data server, which will include audit control access. Once a vendor is chosen, IT managers must make sure the company follows the outsourcer’s industry best practices and compliance guidelines of the home country.

Whatever policies and access controls that are discussed should be outlined in detail in the contract.  A signed non-disclosure agreement, non-compete agreement and no solicitation agreement can provide additional protection for the outsourcing company.  If a vendor refuses to include data protection information in the contract, it would be wise to consider a different global sourcing provider.  Even after the initial terms are agreed upon and the contracts are signed, an outsourcing company should perform regular audits to ensure that data privacy policies are being followed and enforced.

Only the information that is crucial to the project should be shared with the global sourcing provider.  The outsourcing company will have to carefully evaluate the propriety data and technology that are needed to successfully develop the outsourced projects.  In-house employees should be aware of what information is acceptable to share when talking with the global sourcing provider.

By being aware of the potential challenges associated with data protection and taking preventative steps, an outsourcing company can reduce the associated risks.  A&E Consulting can help you evaluate data protection issues when global sourcing and will oversee the first outsourced project. 

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