IT Services Outsourcing - Challenges to Conquer
In today’s corporate world, it is very common to see many companies outsource their IT services to external vendors to take advantage of the benefits such as cost-effectiveness, reduced risks, assured service levels, improved business results by leveraging on the niche skills of the vendor etc. In such an outsourcing arrangement, in most cases, the management control of the IT services still remain within the realm of the company while the vendor provides a suite of core technology services based on the scope of work defined in the contract.
There are some challenges that the IT management team has to face in managing the vendor to deliver services in accordance with the contract. Following are some of the key challenges faced by the IT team at the operational level in an End User company.
1. Difference In Service Culture - A Barrier To Productivity & Team Cohesiveness
Service Culture of a vendor is determined by attributes like professionalism, responsiveness, customer-orientation and consistency in service delivery etc. The internal IT management team plays the role of an internal vendor for IT services to all other departments. The difference in culture followed by the IT management team and the external vendor becomes a barrier to over all productivity of the team and the cohesiveness between the team and the vendor.
"It is essential that the IT team doesn’t lose its focus on the obligations to compliance to all internal policies"
To overcome this barrier, the IT team should help the vendor in bridging the gap by improving the vendor’s- 1. Awareness of Business background, processes and dependence on IT; 2. Internal IT team’s Service Philosophy and by setting Service Level KPI targets (that underpin the SLA metrics defined in the contract) for the vendor etc.
2. Compliance & Security Risks
In an outsourced environment where the IT team has to work with multiple vendors, it is essential that the IT team doesn’t lose its focus on the obligations to compliance to all internal policies. It is the IT team’s responsibility to ensure all IT vendors are aware of the policies and their contractual obligations to comply with them. IT team should consider technology based controls, wherever possible, to enforce policies, security and institute a process to monitor the compliance levels at all times. This topic should feature in the periodic reviews with the vendor in evaluating their performance. Using some quan tifiable metrics or KPIs to measure the vendor’s level of compliance is an effective way to control it.
3. Efficient Utilization of Vendor Capabilities & Resources
As it is difficult to provide minute details about the scope of work that a vendor is obligated to perform in the contract, it is important that the IT team understands the finer aspects of the scope of work and ensure the vendor delivers services to the agreed scope in full. In the process, it is necessary to assess and understand the capabilities and expertise of the vendor and make proper use of it to extract value out of the outsourcing deal.
A full blown Work Break down Structure (WBS) should be prepared based on the scope of work in concurrence with the vendor and it should be used to verify the deliverables at the closure of the project or at periodic intervals in ongoing contracts. It will be useful to evaluate the people from the vendor team before deployment and keep track of the utilization level of each resource wherever possible to proactively avoid resource wastage.
4. Lack of Program Management in “One Vendor & Multiple Service Lines” Scenario
In a scenario where you outsource different parts of a larger project or operational activities to multiple business units or service lines of the same vendor, it is likely that there will be conflicts arising out of the differences in the objectives that each team is pursuing which could potentially impact the outcome of the outsourcing deal and the ownership of overcoming the conflicts may implicitly be transferred to the IT management team. So in such cases where multiple business units may operate in silo’s, it is necessary to clearly define ownership of program management with the vendor before the project or activities begin at the ground level. The IT management team should focus on the value coming out of the integration of work from different business units rather than just the management of the program.
With the ultimate ownership of providing IT services to the organization, the IT management team should be well prepared to face such challenges and focus on deriving business value out of the outsourcing deals to enable better business outcomes.