If your company is currently outsourcing or considering offshoring for the first time, you may be concerned about recent events, such as reported terrorist attacks, that could impact your outsourcing relationship.  You may be wondering if your outsourcing contract has the protection you need in this uncertain environment.

The current world economy and geographic instability has forced many companies to rethink the way they approach outsourcing.  It is possible to establish practices that will help you anticipate possible threats and create an alternative plan.  One of the ways you can protect your company when global sourcing is to negotiate or re-negotiate your outsourcing contract.  CIO.com gave several tips for negotiating outsourcing contracts, some of which are summarized below:

1. Revise clauses, such as force majeure to include other threats.  Force majeure usually releases both the buyer and vendor from liability when there is an event out of their control.  Typically the focus is on natural disasters.

2. Review termination provisions.  Termination provisions should take into account the possibility of an unforeseeable threat to the vendor’s viability.  The buyer should make sure that the provision allows them to respond to changing vendor conditions.

3. Modify change of ownership provision.  This provision should address an event where there is a breakup of the supplier.  The change of ownership provision should include acquisitions, as well as breakups.

4. Decide who owns the assets.  It should be clearly stated in the contract which entity owns software, documentation and other intellectual property.

5. Include terms and conditions that focus on emergent concerns.  CIO.com advises suppliers to use clauses addressing transition-out requirements, audit provisions and termination costs.

6. Seek advice from a professional.  It is advisable to contact a professional, such as an outsourcing consultant, who can help you get the contract right.

The outsourcing consultants at A&E Consulting have the experience and knowledge to help you succeed with your outsourced IT projects.  We offer support throughout the entire process and we will provide you with flexible solutions to meet your IT outsourcing needs.  Call (661) 200-3612 or email info@aandeconsulting.com today.

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The current economic climate has forced many IT executives to change the way they approach outsourcing decisions.  They are now faced with more challenging decisions regarding global sourcing strategy and objectives.  IT executives have to take into consideration such factors as technology trends, budget reductions and anticipated learning curves.

Most companies looking to outsource IT development typically focus on the benefit of cutting costs.  However, what most companies fail to realize is that global outsourcing has more to offer than just cost reduction.  Additional value can be created in an outsourcing relationship through innovation.  Once an outsourcing relationship has been established, it opens the door to innovation, allowing the buyer to realize an even greater benefit provided by the vendor and to stay current with technology trends.

Offshoring and near shore outsourcing provide a way for companies that have been forced to layoff key personnel, to still move forward with strategic projects.  Global sourcing is an attractive option for many companies that have had to reduce budgets due to the economic slowdown. 

Companies today are feeling the pressure to achieve results while avoiding the common mistakes made by other companies that have outsourced in the past.  This sense of urgency had made companies try to avoid the learning curve associated with IT outsourcing.  It is often difficult to attain this goal, but with the proper preparation and informed decision making, it can be done. 

A company must decide if it will outsource to multiple providers or focus on one vendor.  While choosing to outsource to just one IT provider does make the process a lot simpler, the company can be missing out on the opportunity to take advantage of the diverse expertise offered by multiple providers.

Global sourcing offers many advantages to IT companies.  Companies can benefit from IT outsourcing during this downturn, as long as they take into consideration the unique factors presented in this economy.

The outsourcing consultants from A&E Consulting can help you choose the right outsourcing location and partner.  It is our goal to provide each client with a personalized solution that minimizes the time of implementation and maximizes the return on investment.  Contact us today at 661-200-3612.

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According to a study by Black Book Research, the fact that we live in an unsafe world has spilled over into outsourcing decisions.  When you are outsourcing IT development, insuring data and intellectual protection is crucial, which is why you should be aware of the risks associated with different outsourcing destinations.  As the world economic climate has shifted, one of the most challenging decisions you will now have to make is choosing the appropriate outsourcing location and provider.  Based on Black Book Research’s study, which evaluated the risks of offshoring, there are definitely some locations you may want to avoid.

The purpose of the study was to assign rankings to major metropolitan locations of outsourcing.  Researchers assessed the safety and security of outsourced operations by analyzing downstream risks of offshore outsourcing in 2009, evaluating supplier side risk, developing a decision model for outsourcing buyers regarding the ramifications of offshore outsourcing’s downstream risks and providing insight into these risks.

Researchers used online surveys and interviews of over three thousand corporate development leaders and experience to assign rankings to offshore locations based on risk perception.  The following is a brief list of locations that researchers found to be the riskiest as far as unsecured and unprotected networks, infrastructure, technology and telephone and legal system immaturity:

• Bogota, Colombia
• Bangkok, Thailand
• Kingston, Jamaica

The locations that were considered the safest in offering secure and protected networks, infrastructure, technology and telephone and legal system maturity for outsourcing included:

• Toronto/Montreal, Canada
• Singapore, Singapore
• Dublin, Ireland

The Outsourcing Dangerously report by Black Book gave some tips to mitigate the risks of offshoring, such as performing a risk analysis and being aware of where your processes and data are outsourced.  It was also suggested that threats could be minimized by identifying industry consultants who can assist you in an offshore crisis.

A&E Consulting can help you choose the right outsourcing location and partner.  It is our goal to provide each client with a personalized solution that minimizes the time of implementation and maximizes the return on investment.  Contact us today at 661-200-3612.

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While there is a lot of speculation regarding the condition of the U.S. economy, Gartner Research believes that offshore outsourcing, also referred to as offshoring, will continue to grow during the economic slowdown.  Companies will look to IT service providers to increase the percentage of labor in offshore, lower cost locations.

Businesses are focusing on cutting costs, which is increasing the popularity of offshoring.  As companies look for ways to cut costs while still maintaining productivity and maximizing profits, offshore outsourcing will become an even more attractive option.

Current activity within the outsourcing industry shows that companies still outsource even when the economy is slow.  According to Gartner’s report, many U.S. companies are taking measures to quickly implement offshoring programs and are sending more jobs to offshore locations.  If the economic downturn is only temporary, there will be many first-time outsourcers looking to offshore IT providers.  In the situation where the economic downturn turns into a sustained recession, Gartner believes that IT budgets will be cut more aggressively, which will just increase the need for offshoring.

As more companies are turning to offshoring, the outsourcing destination will be one of the main considerations when choosing an IT service provider.  It is important for companies to carefully analyze the benefits and risks of each location to determine which country would best fit the organization’s needs.

TJ Singh, a research director for Gartner, commented on India as one of the main destinations for offshore outsourcing.  In a statement he said, “Factors that will give India the edge over other offshore locations are scale and quality of labor. North American and European buyers of IT services have been the force behind a growing offshore services market and India is central to almost any discussion of offshore services delivery for these buyers. Whether it is the indigenous India-centric service providers that have a wide-reaching impact on the IT services sector, or a vast and growing IT labor pool being trained to support a global client base, India will continue to be the most-sophisticated country option to source offshore IT services in the near term.”

Offshore outsourcing boasts many benefits for the IT sector, whether the economy is slow or not.  Some of the main benefits include expanded hours of operation, access to qualified IT personnel, ability for rapid scaling of operations and the opportunity to accelerate IT implementations.

For more information regarding offshore outsourcing, contact  A&E Consulting.

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