September 15, 2003 (Computerworld) --
Outsourcing IT services overseas began largely in the mid-1990s, when the U.S. couldn't educate technology professionals fast enough to support market demand. At that time, offshore resources were used to augment IT staffs by performing basic, routine functions. Today, offshore resources continue to augment U.S. IT staffs, but they're also displacing some homegrown resources. Many offshore providers are now able to deliver far more complex technical tasks and projects to their customers in the U.S., at a fraction of the cost of comparable domestic resources.
It's safe to say that the concept has achieved broad-scale adoption. America Online Inc. has outsourced a call center operation of 1,500 people to a provider in Bangalore, India, and EarthLink Inc. and Yahoo Inc. are following suit. Gartner Inc. estimates that the U.S. leads in offshore outsourcing, accounting for approximately 60% of the $119 billion in revenue taken in by outsourcers to India, and the research firm adds that Indian outsourcing is expected to grow to $234 billion by 2005. Many CIOs have accepted that offshore is here to stay, so now they must tackle how to integrate those resources with an internal IT team and collect on the value promised.
As CEO of an IT services company, I am frequently asked by customers about how we leverage offshore resources. My challenge mirrors theirs. While the use of offshore resources will certainly reduce operating costs and price, the lowest price won't guarantee satisfactory service.
However, when integrated and managed correctly, the use of offshore resources can reduce operating costs, as well as increase levels of service. How can IT managers achieve this dual benefit when augmenting a team of professionals with members located on another continent, in another time zone and another culture? The answer is by integrating service models with carefully managed processes to ensure the highest level of service.
There are a handful of quality assurance frameworks for vendors to choose from to guide the integration of offshore resources, including ISO 9000, the Software Capability Maturity Model and the IT Infrastructure Library (ITIL). The ITIL process framework was developed in 1995 by British Telecommunications PLC and has since been adopted by Microsoft Corp. and other market leaders. ITIL provides structure for IT management on a global scale and is recommended if considering a process for offshore integration.
The ITIL process framework addresses essential service support functions like incident management, systems configuration and change management. Service delivery is also covered by ITIL with processes for service-level management, capacity management and business-continuity management. The use of a process framework such as ITIL will provide a road map for integrating offshore resources with internal staff.
Consider change management. This process is vital, regardless of provider location, because it sets up a step-by-step process for proposing, agreeing upon and implementing a customer's systems change. Offshore resources can be effectively integrated into this important IT function regardless of their location, with strict adherence to the process framework. As many changes are performed during off hours, change management is a good place for IT managers to derive the benefits of offshore outsourcing.
IT service management processes help alleviate the discomfort of integrating new team members on either side of an outsourcing engagement. Processes shorten learning curves through a clear presentation of responsibilities. They also provide guidelines for defining metrics to measure performance against customer experience and service agreements. This ensures that both sides know what to expect.
When incorporating offshore resources into an IT operation, CIOs must develop and properly communicate timing and transition plans. The clear presentation of milestones, timelines and accountability for all resources involved will help maintain internal staff performance and morale. Consider conducting a pilot program for no less then six months, so that the processes can be improved upon. CIOs can also determine that their offshore provider is committed to the processes. By integrating a process framework and measuring results, IT managers can gain the dual benefits of improved service and lower operating costs through access to offshore resources.
Peter Weber is CEO of SevenSpace, an IT service provider in Ashburn, Va. What do you think? Post your thoughts and see what others have to say in our outsourcing discussion forum.
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