Secrets of long term Sourcing Relationships

Many clients get surprised by the amount of internal organizational change management, transition planning and execution needed to make the sourcing relationship productive from the start, as well as sustainable in the future. It takes a combination of active and focused preparation to achieve a successful initial transition and a viable relationship that achieves planned business case benefits.

It is important to align and control transition activities and leadership, at both individual and organizational levels. When outsourcing functions with the associated resources, there is much to think upon. So there is a need of asking and answering several interrelated questions that are very important to a company’s future success.

Below are some of the best practices components of transformational sourcing:

• Transition Management
• Communication Management
• Vendor Management
• Operational Alignment
• Service Management

Transition Management: What should the plan to transition and transform functions, knowledge, tools, projects and processes to and with anew supplier look like?

A comprehensive plan, the right team and transition management office (TMO) structure, and governance are musts for the management of complex transitions and transformations; including service implementation, involvement of ket stakeholders, communication, people transition, risk management and readiness for steady state.

Change management and Communications Management: How to prepare people for the change and the opportunity that is represented? When and how to communicate what the changes mean for the company, organization and for individual team members?

Change Management: This requires a deeper approach to organizational change management that is found with project-level change. Implementing of a sourcing strategy requires addressing change across new organizational structure and leaders, new employee roles and responsibilities with new skills.

Communication management: Strong sourcing management also requires robust communication management. Making communications an integral part of the overall sourcing strategy ensures fact based messages are conveyed consistently, accurately; and with the right message delivered to the right audience at the right time via right medium.

Vendor Management: How to manage and optimize the new supplier relationship to achieve the promised results and maximize its values?

It is imperative for an organization to define the Vendor Management Office (VMO) processes that operationalise the sourcing relationship and align the organization and the supplier on a common understanding of expectations for how the relationship will actually work and be governed.

Operational Alignment: How to align the new organization and its established processes with the supplier and their processes to achieve the desired outcomes for the business and the relationship?

To ensure this each stakeholder must understand its responsibility, the business processes that will change and the touch points or handoffs between the organization’s team and the supplier.

Service Management: How will the sourcing implementation change the process of engaging with the business customers? What should be done to improve provisioning of services and to better align IT services with business objectives?

To increase the chances of successful implementation of a new supplier relationship, an organization will need to navigate all aspects of the sourcing transformation through change management and transition planning focus.

Top vendor Management Problems causing value leakage

Over time it is not uncommon for organizations to find themselves with a large number of service providers supporting their global IT requirements. Some of these providers are no doubts strategic to the business but for the most part, many perform routine, commodity type services that the enterprise has chosen to contract for rather than use internal resources.

For some firms a large no of vendors may be in hundreds while for others twenty or thirty might be considered large. Whether the total number of suppliers supporting an enterprise number in the tens or in the hundreds, multi-vendor management is complex, time consuming and inherently very costly.

Quite often it is seen that client organizations develop a sizeable overhead organization and infrastructure to support many different contract types including service request and fulfillment processes, resource tracking and report requirements, pricing models and billing arrangements. Not to mention the amount of leadership time and energy is expended trying to manage so many providers.

Poor Vendor Management Leads to Value leakage

Top reasons for value leakage related to poor Vendor management include:

• Lack of visibility to the client’s business strategy across the supplier community
• The provider’s service delivery footprint has eroded over time and is no longer aligned with the client’s requirement
• There is little or no competitive tension between providers
• The client organization does not measure providers against Conformance to Quality (CTQ) metrics
• There are few incentives to providers to improve performance levels over time
• There is a lack of partnership for innovation across the different provider type and relationship

Multi Vendor management challenges

Multi Vendor Management includes many challenges. Some of the prominent ones are:

• Fragmentation: the fragmentation of supplier effort across multiple locations and limited sharing of best practices across the supplier community
• Misalignment: The misalignment of client’s sponsorship, resource priorities, services, delivery models and differences in processes and systems between countries and/geographical regions within a country
• Lack of vendor innovation: Lack of vendor innovation is due to ineffective SLAs or inconsistent mechanisms to hold providers accountable for their performance, vendor complacency, and unwillingness to identify opportunity for innovation
• Lack of standardization: A lack of standardization in service delivery platforms and client business models across geographies and business units, proliferation of disparate systems dictating different strategies for supplier portfolio management and under investment in governance, process and technology
• Sub-optimization: Sub-optimization of key functions as a result of ambiguous roles and responsibilities, confusion regarding service line requirements, lack of clarity regarding investment decisions and the absence of a mandate to drive more effective spend through better multi-sourcing supplier management

Vendor rationalization is one way to consolidate the effort an organization applies to vendor management. Consolidating vendor management effort allows an organization to better leverage its supplier spends and improves service delivery outcomes regardless to contract types or supplier relationship.

The ‘Do’ List for a Successful Outsourcing Deal

The ‘Do’ List for a  Successful Outsourcing Deal

Under pressure companies are looking for new targets to reduce costs, everything from legal and HR services to business processes and R&D are headed the way of the contact center-overseas. The famous saying that “Aiming after the shot usually means missing the goal altogether” holds true for any outsourcing deal. But failing to define the goal has equally devastating effects.

Defining a Good Outsourcing Deal Overall

While end-objectives differ from organization to organization and from contract to contract, there are some general procedures to follow to ensure you are achieving best advantage in outsourcing negotiations. These are the critical areas to look for:

   No Minimum obligation

Companies should not enter into offshore contracts that contain minimum volume or returns commitments. These deals are mostly labor-based and therefore no minimum commitment is necessary or apt. Companies should, however, negotiate a discount plan that influence volume discounts for increased utilization and use.

  Cessation for Convenience

This best way is important because it allows a company to terminate an offshoring agreement before the end of the agreement for any reason and without having to pay a significant termination fee. This gets rid of potential fight over the justification for terminating the contract, whether they are related to performance, cultural issues, distance or other areas that just may not be appropriate. Even if the terms of the contract are technically satisfied, e.g., compliance with service levels, a company may still not be happy with other aspects of the deal and want a way out. Of course vendors will push back on this, claiming that they need to be compensated for stranded costs,

  Length & Flexibility of contract

Assuming there is a good termination of convenience clause, a good contract will consist of an initial term of two to three years with two to four succeeding one-year extension options that the customer can exercise at his own discretion. In addition, all terms of the deal, including price remain the same.

   Currency Options

Considering the various currency implication, including hedging, banding, and reviewing average exchange rates, companies shouldn’t mechanically proceed with a decision to pay for their deal in dollars. While offshore vendors will gladly walk their customers into that option as it usually favours the outsourcer’s financial interest, companies should take a close look at which currency payment structure option makes the most financial sense for its particular risk profile, fiscal approach, and treasury policy. A good deal will safeguard the integrity of the deal and take into account the international implications of payment

  Key Resources

Companies should make sure that as many resources (from the vendor) as reasonably fall into the category chosen as “Key Personnel.” Companies’ rights with respect to Key Personnel include provisions that allow them to interview vendor resources for their projects, cite displeasure with performance and terminate resources if necessary, limit the vendor to replace those resources at their own discretion.

  Intellectual Property Rights

A best practice for protecting intellectual property, such as when software is being developed, is to build in clear provisions imposing the company’s ownership of the software, averting the outsourcer from using the software again for other purposes, or selling it to competitors. The proper disclaimers and provisions, which differ from country to country, should be included.

    SLAs

A good contract has service level agreements (SLAs) that link directly to the outsourcer’s performance levels and moreover are decisive on those areas that create positive business impact for the company. Meaningful SLAs are firmly tied to business outcomes.

      Benchmarking

Staying cut-throat with the market is important and should be done each year to ensure fair and practical pricing. This practice keeps the outsourced vendor on the same page with the market. If the two parties are at opposite ends of the spectrum, then a third-party may come in and pick one or the other’s proposal-forcing both sides to implement integrity as they realize that the other party’s estimate may be chosen.

      Productivity enhancements

This item is particularly critical in offshore activities because they are more labour-based, with the true value provided by the outsourcer being one of improved technology, process and methodology. The customer should bargain for annual, minimum cost decreases that will require the outsourcer to drive productivity in order to preserve its margins.

In other words, to bag the best deal: Pick a target, choose an ideal weapon, locate the sights, steady your aim,but don’t rush the shot. In this economy, one shot may be all you’ve got.

 

 

Mitigating Risks in Outsourcing

The high level paybacks of outsourcing IT services are often well-known within the IT industry. Even so, many clients do not fully understand “why” and “how” an outsourcing agreement can provide these potential benefits. Those who do understand the benefits may not understand the risks that must be managed in order to realize those benefits. Understanding theprobable risks will allow you to make a better informed sourcing decision.Even though the benefits of outsourcing are fairly well-known, it is worth summarizing them for reference.

Reduced Cost

Companies that provide IT outsourcing services function in a highly competitive marketplace. This market pressure, coupled with the scale of capabilities, abundance of lower-cost (but highly skilled) labor and investments in productivity tools and processes, means a provider can more than likely deliver services at a much lower price than you can do on your own. Additionally, you will improve your ability to achieve year-over year savings, as annual reductions are often documented in an outsourcing agreement.

 Improved Quality

Outsourcing vendors are motivated to improve the quality of your operations. Outsourcing providers have invested billions of dollars to build the tools and processes they use to deliver IT services to clients, and they use these investments to differentiate their ability to provide high quality services at comparatively lower costs. The cost models typically used by providers will assume some annual reduction in resources (and therefore costs) based on the quality improvements they assume they can make. Moreover, a market-based outsourcing contract will drive adherence to well-defined service levels, some of which are expected to improve over time. As the famous saying goes,“what gets measured gets managed.”

Ability to Redeploy Resources

Gradually this is becoming one of the more important factors influencing sourcing decisions. The challenge many IT departments face is how to free up some of their most knowledgeable people to workon initiatives that will truly add value to the business. Some of these people become

“superstars” over time, and are continually pulled into operational issues which reduce their ability to drive strategic change. Without a significant event like a new outsourcing agreement, it can be hard to overcome the organizational inactivity that keeps these people locked into their current role. As quality improvements are made and the provider becomes skilled at addressing operational issues, these people can be redeployed into higher value planning, engineering or development work, and you get the added benefit that they are still in the organization “just in case” their skills are needed.

 Improved Delivery Capability

Procuring managed services from an outsourcing provider, if done well and if structured by a market-based agreement, encourages a higher level of performance related to services, service levels, innovation and process maturity. Creating and negotiating an outsourcing contract requires you to spend time articulating the specific services to be performed and how those services will be measured. Integrating your processes with those of another company requires a higher level of process discipline

Risks

The probable risks of outsourcing are not nearly as well-understood as the potential benefits. An important observation is that many times clients develop risk mitigation strategies that are almost solely based on technical risk. Understandably, there are concerns and issues that need to be worked through in every outsourcing relationship. Issues such as connectivity, knowledge transfer, dearth of certain skills, migrating environments, etc… are important and need to be addressed.

Absence of Communication

The importance of a detailed and managed communications plan cannot be over-emphasized. This is about ensuring your retained employees, your non-retained employees, your employees who are transferring to the provider, your executives, your stakeholders, your leadership team and yes even your potential new provider are being told what they need to know when they need to know it. Without a structured communications plan and process that explains what is happening and why, there will be voids that will be filled with misinformation and a reluctance to change. This can lead to unplanned employee turnover, missed transition plans, and a lack of understanding and buy-in from the consumers of IT services. Actively pursue ways to keep your provider informed (even during the contract negotiation phase), not just from a transition perspective but also to keep them fully apprised of the activities and objectives of the business. This will allow them to better understand your requirements and to deliver the best solution possible.

Your lack of ability to Change Behavior

The IT leadership team in place today quite probably became successful through their ability to manage specific technology and people. However, a significantly different set of skills is required to successfully manage an outsourcing relationship. Leaders must learn to handle expectations and outcomes and let the outsourcing provider manage how that work gets done. This is done by managing relationships, governance processes, status reporting, issue tracking, prioritizing, service level management, and process discipline. Unfortunately it can be difficult for some people to move from one paradigm to another. If these types of leaders cannot change but remain in a position to direct the provider, they become a source of friction in the relationship and can keep you from receiving the maximum value from your outsourcing provider. Make sure your leaders have the right skills to manage an outsourcing relationship, or substitute them with ones who do.

Loss of Business Knowledge

It was somewhat normal for companies to outsource practically all of their services to a provider, often time only leaving a CIO and a couple of executives in place to manage the relationship. Unfortunately, companies understood that they had outsourced too much, and by doing so had lost much of their “tribal knowledge” so they struggled to stay aligned to the business. The good news is that arrangement is rarely used anymore, and companies now realize they must retain a  sufficient level of strategic resources to manage the outsourcing relationship, manage the relationships with the business, maintain overall accountability for delivery, and to set overall direction and priorities. Also, as you develop your transition plans you must address how knowledge will be transferred to the provider. In some cases it is primarily done through the transfer of certain subject matter experts to the provider, while in many cases it is really dependent on the system documentation and training sessions used to share knowledge with the provider. As you develop transition plans and design your retained organization, ensure that you fully comprehend the need to build and retain key business knowledge.

Unclear Expectations

There are hardly ever cases where an outsourcing provider does not and cannot provide the services they committed to in the outsourcing contract. However, there is always a minor risk that something was not thoroughly understood and documented during the negotiation phase, and that for some reason cannot be effectively supported in the new agreement. What can you do? As they say, the best form of defence is a good offense, and there are several means you can design into the outsourcing contract to protect yourself in these cases. For example, make sure to require a assurance to follow a defined set of industry standards (e.g., ITIL, CMMi) so that services are more easily transferrable to other providers if required. Make sure the agreement is flexible enough to allow for some change in scope without cessation penalties. Define a strong, market-based service level contract that defines remedies and penalties, and define and put into practice a governance process that ensures delivery and relationship issues are quickly escalated to the right executive levels for resolution. From a vendor management perspective, you may also want to consider a multi-vendor strategy that maintains some competitive tension while also providing you with a “hot backup” provider in the event that certain services are not being delivered as expected.

  Business Case not achieved

At the end of the day, the goal of an outsourcing relationship is to achieve the defined sourcing objectives while meeting the business case upon which the decision was made. Oftentimes, the focus after agreement is signed is only on the technical portion of the transition of services, and it becomes almost impossible as the months go by to track performance back to the business case. Even when the business case is tracked and managed, it is found that the original business case was inaccurate or inadequate, and therefore the actual costs are higher than expected while the corresponding overall savings are less than expected. The best way to mitigate this situation is to ensure the business case is thorough, comprehends all expected investments, savings, and new charges, and is developed with a level of detail that can survive inspection from the CFO and board.

It should include assumed ramp up of services, ramp down of retained organization expenses, one-time costs for transition, legal fees, advisory fees and the like, retaining of certain resources, appropriate contingencies, expected changes due to growth and scope changes, COLA impacts, and so on. The business case should be updated periodically and reported against the baseline business case to identify any significant variances.

Conclusion

While benefits of outsourcing IT services are fairly well-known, many clients do not fully understand the risks that must be managed in order to achieve these benefits. Prior to finalizing a decision to outsource, make sure to think about how you will communicate with key stakeholders, change the behaviors of your leadership team to manage an outsourcing relationship, retain the required level of business knowledge, clarify and thoroughly document expectations, and develop and manage a solid business case. By doing so, you will make a improved informed sourcing decision and will be better prepared to understand the benefits that an outsourcing relationship can offer.

 

Cloud Security

Customers who implement cloud solutions are concerned about the security of their data on the cloud. The top major providers where customers upload the data are Facebook, Youtube, Google drive, Dropbox, Microsoft Skydrive, etc.
The concern is not only about who can access their private data, the concern is also if these service providers sell their personal data to someone else.

Security is a major impediment in a large scale implementation of the cloud, irrespective of the model, SaaS, PaaS, IaaS. Cloud providers are aware of this and in response are working towards strengthening the security of their offerings.
The 4 major areas which Cloud service provders should consider are:
1. Confidentiality
If a customer uploads his/her data on the cloud, the cloud service provider should not be able to see the data. This can be achieved by encrypting the data. Encryption can be done by the customer before uploading the data or can use the encryption services of the service provider.
Encryption is just some assurance that no one except for key holders can have access to the uploaded data.

2. Integrity:
Integrity means maintaining and assuring the accuracy of the uploaded data. The data should not be tampered with and should be preserved in its original form. The service providers should ensure the data communication and data storage are well guarded against attacks. Implementing HTTPS or any other type of robust security measure would help build trust amongst the customers about the service providers.

3. Availability:
The service provider should ensure the data that is uploaded is always available for the customer to use. This can be implemented by having backup servers and ensuring backup is done at a regular frequency. Thus in case of a calamity where 1 online system is down the other can take over and provide the necessary data to the users. The service provider should use robust infrastructure so that any disastorous event does not have any effect on the provided service.

4. Mutual Auditability:
The customer should be able to verify the actions that are carried out on his/her data. The customer should be able to verify that the actions carried out on the data are by him/her only and the service provider has not completed any action on customers’ behalf. Each data revision should be digitally signed by the customer so that the any activity on the data by the service provider will be highlighted.

Ensuring these key areas are implemented, the service provider can imbibe trust in its customers to upload the data. Also, the customers can then be willing to use the services of the cloud service provider.

Homeshoring

A number of companies are turning to a new method to meet call center challenges – getting workers to handle calls from their homes.

“Homeshoring” or “Homesourcing” in certain situations can boost productivity while cutting costs. This practice also can avoid a potential pitfall of sending such work overseas.

Companies are turning to homeshoring in response to call center challenges such as the need for superior agent quality, frequent turnover and the seasonal nature of the business. Alpine Access, Aspect Communications, IntelliCare, West, Willow CSN and Working Solutions are companies with “home-based sourcing methods and strategies,”

A number of companies in the technology industry are giving workers more flexibility in the way they do their jobs, including the option of working from home. There are challenges involved in telecommuting arrangements, including data security risks. Also, home workers can feel alienated. But homeshoring can help both agents and companies.

Accessing high-quality agents is not limited to those within commuting distance, and agents can be contacted when needed instead of occupying call centers during periods of very little call activity.

So, the next customer service agent you get on the phone may be sitting in slippers and a bathrobe.

Things to consider while outsourcing

The major driver for outsourcing has been the availability of low cost resources offshore. Recently, large enterprises are reconsidering their outsourcing strategies.

Here are a few things to consider for the outsourcing contract to yield a win-win situation
1. Quality of the deliverables:
When only looking to cut costs, the customer might settle for the lowest possible cost that can be incurred. This hampers the quality of the project being delivered as the vendor will employ low quality resources which are available cheaply.
Thus the customer has to make a tradeoff between cost and quality. A certain level of quality should be expected and budgets should be allocated accordingly.

2. Communication
A lot of communication is involved between the onshore managers and offshore team. Not only language barriers exist but also there are cultural differences. CIOs must be ready for this and plan out the communication accordingly. Any technical communication should be comprehensively documented in order to avoid future standoffs.

3. Staff morale
Whenever a company decides to outsource some or whole of its operations, the current staff morale takes a hit. The CIOs and managers have to align the staff and appraise them about why a particular operation or project is being outsourced.

4. Human Resource capabilities
Even if there is a plethora of skilled people in IT, there is still a shortage of quality workers. Getting such people on board and retaining them is a big task for human resource managers. Also, if the skill that is required is high on demand on the market, then it becomes more difficult to get and retain such people.

5. Resource management
It is difficult to manage a workforce that is distributed geographically in different time zones. Different time zones act as a barrier to effective project collaboration. IT managers and CIOs should consider this and plan out effective communication strategies.

Outsourcing is a major decision that is taken by any organization. CIOs and IT managers have to take each step in such a way that current operations are not hampered and the cultural integration happens smoothly.
Above mentioned areas should be looked at carefully to ensure that outsourcing is beneficial for the organization in the long run.

Best practice in an Outsourcing contract for buyer protection in provider’s M&A

As the outsourcing vendor landscape continues to shift through mergers and acquisitions, how can buyers build their contracts to protect what they envisage in the relationship despite a change in provider ownership?

On one level, the service description in the contract or SOW or in a procedures manual documents the agreed approach. If there’s something that’s meaningful, the contract needs to call that out. There needs to be enough firmness and clarity in the contract requirements so that the acquiring provider can’t suggest it doesn’t have those obligations.

On another level, there should be a change-of-control provision in the contract and language that requires notice and consent or some other mechanism that enables the customer to maintain control over who will be performing their outsourced functions.

This is an area where people often think: A non-assignment provision or some other provision needs to be put to remove the ability to assign the contract. People don’t always think through what that really means. Unless it’s a major part of the deal, someone needs to be aware of the fact that even if a customer rejects an assignment, it won’t really stop the transaction from occurring. So the customer needs to think through how it will handle the outsourcing contract, assuming the acquisition occurs. Some issues to think through include:

• What are the intellectual property challenges?
• How quickly can the customer move to another provider, and what will it need in the meantime? If the scope of work is for sophisticated services, what will happen if the customer has to pull off a separation on a timetable it doesn’t like?
• What if the people working with the original vendor leave? How does that impact knowledge retention? And does the customer have agreement provisions relating to review of new personnel?

The positives of outsourcing can be the negatives in that, if the customer does it effectively and to a great extent of achievement, it no longer has internal resources to bring the work back in house. The people also are not available to ask them for advice on how to fashion the organization to deal with the new impact. A best practice is to make sure the relationship is a win-win arrangement. Although that term gets over-used; but in situations where the provider benefits, the buyer is not in as big a performance risk.

The performance assurances are the performance commitments, regardless of whether there’s been an acquisition or who’s actually performing the services. Many buyers include a cessation provision in the agreement so that, if there’s a change of management with regard to the service provider (whether it’s an acquisition or a merger), it gives the customer an chance to say: “Wait a minute, that’s not what we agreed upon. This is not who we desire to deal with.” Customers should make sure they have adequate flexibility in the contract to allow themselves to get out of that type of situation or at least enough control to make sure their work is getting done as expected or agreed upon

 

Providers are cautious about signing an agreement, they don’t want to be in a position where the customer has enough rights to potentially hold up a merger or acquisition because the provider can’t assign the contract or the acquirer doesn’t want to assume the risk of a major customer exercising their termination right.

Whether the customer has to pay a termination fee to exercise its exit rights in the event of a change of control is often the subject of a fair amount of negotiation. If I’m the customer, I might take the stand that there should be no cessation fee for a change of control-triggered termination because the provider, by choosing to sell itself to or be acquired by a company I may not want to do deal with, in effect put me in a spot where I feel forced to end contract

As an aside, this is also an example of where, in some instances, it helps to have a shorter contract term. It’s one thing for the customer to have to deal with their provider merging or being acquired for only another year or so before the contract comes up for renewal. But it’s an entirely different situation when the customer is facing the longer portion of a five year contract before they can move the business to another provider. 

 The up-front homework in this case is: what’s really happening to the data; where is it going; if we need it back how do we get it; and if there’s an analysis, who else can get it? Buyers need to do their homework and ask questions in advance. Just because the contract is simple doesn’t mean that it works the correct way for the buyer’s needs. Like many things in the legal area, it may become evident only after there are problems because people were not aware that their data would be available (or not available) in certain situation.

 

Renegotiating IT Outsourcing Contracts

Need

Outsourcing an activity is done when there is a value addition in doing so, viz;

• Better service quality
• Cost benefit  and Manpower benefit
• Lesser tension in performing the particular activity

Outsourcing an activity does not absolve the parent organization / person from the ultimate responsibility of delivery in terms of quality & timeliness.

Hence any organization should keep the above points in mind before outsourcing.

Initial Parameters

Each Organization will have its own reasons for outsourcing. The call will have to be taken by IT, before outsourcing.

Midterm Review of operations / service delivery

Any outsourcing cannot be for eternity.  The initial contract will have to specify clearly the terms of reference for delivery and also the review period. It is better to review all aspects of delivery, so that, any new parameter that may have come up during the intervening period, can also be taken up. It is also essential to have midterm review to have a clear idea of the performance, so that necessary course corrections can be done.

Re-Negotiation

After the first phase of execution, it will be time for re-negotiation. This is the time when both the parties should have an independent internal review, taking into account their own interests and future business.

Some points can be:

• Is outsourcing still required for the activity under consideration?
• Are there others in the market, which are better in terms of delivery capability? Can the activity be outsourced to more than one vendor for safety purposes
• Is the vendor using the latest technology?
• Delivery capability check is very essential, as personnel and other required resources keep changing
• Are there any new technical requirements that have cropped up during the intervening period?
• Due to the previous experience can the delivery time be improved?
• Delivery measurement – are the objectives of the company’s being met & aligned with
• Cost evaluation –
  • What is the market rate?  Is it down or up
  • Even if there is a down turn, one should not negotiate very hard, as that may reduce the minimum margin that the vendor is operating. This will affect service delivery.  It is better to do some internal, simple calculation to find out whether the vendor quote is within reasonable limits.
  • The client’s scope might have increased. Provision will have to be made for the same
  • All these will ultimately result in cost. The customer will have to be forthright in negotiating the cost without compromising the delivery objectives.
  • Has the vendor developed any other capability that may be useful to the client? This may give an advantage to the current vendor

Summary

• The client should put in writing the clear objectives of its outsourcing
• Evaluate new contracts based on the above points
• Decide the best vendor, taking into account its own delivery interest
• The usual L1 logic of tenders MAY not apply here, as the outsourcing department is ultimately answerable to its own customer departments for quality, quantity & timeliness

Investment Capital increase in Small Business

Nowadays business of any kind or type i.e. small or large, national or international (Local or overseas) needs an IT department in it. IT has become a vital and an integral part of any business. In order to compete in this big world of business small businesses have started giving more importance to their IT department. So to do so, they have started increasing their budget for the IT department since the beginning of this year.

The strategy that the business has adapted is to increase the budget and improve the technology and train the present employees on the same rather than recruiting new ones. In short they are increasing the percentage of the budget by almost 20% and reducing the recruitment by almost 5%.

Statically, if the budget for a firm with 1000 IT employees was increased it wouldn’t make much of a difference but on the other hand if the same would be done to a firm with 250 IT employees it would have made a hell lot of difference.

These businesses are investing this big chunk of money towards the hardware which the employees can use and use it to benefit the work they do and in turn help the business make profits. The 2 most important things that they are investing on are tablets and cloud computing. Using these 2 very essential things would help the company provide a more balanced and flawless managed and cloud service providers. The usage of cloud computing and hosted IT services has helped a lot of small business in the past few months and its usage is expected to increase due to its efficiency and easy accessibility. Also there are statistics that over more than 70% of the small businesses are using Server Virtualization.

Tablets being the new trending gadget in the field of technology, its use are accounted for giving more flexibility in work. Ever since its launch its use has been growing. Nowadays almost every second person at work place has a tablet. Having this is a lot more beneficial than predicted. It helps employees get handy with their work. It is much lighter than any laptop so the employee can carry it with great ease wherever he wants and get work done on the go. Thus, all the small businesses are encouraging its employees to have one tablet, if not everyone but at least the higher officials.

Thus the small businesses are focusing on optimization of the resources with the tools and technologies to help their business grow better and faster.