Offshore outsourcing can be the catalyst to effective internal IT management, according to Forrester Group analysts speaking at the analyst group’s GigaWorld IT forum Europe, in Prague.
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“Offshoring is not easy,” said Forrester CEO George Colony. IT organisations have to create an internal organisation, culture and metrics before they can consider offshoring. Then, “It can take 18 months to set up a deal,” he added.
The contract then requires significant resources to monitor and manage. “It is a very fraught business and it carries risk,” said Tara Basi, former CIO of shipping line P&O Nedlloyd, who has successfully moved “jobs, processes and activities” to service providers in India and China.
Companies initially considering offshore outsourcing tend to focus on cost reduction, said Basi, but organisations that have taken the plunge were now realising that they could use offshore resources to deliver business processes that could not be created economically in their home location.
“Offshoring allows the organisation to gain an edge in flexibility,” said Basi.
Forrester analyst Andrew Parker said there was now a significant transformation in offshore outsourcing from simply handing over jobs and function to an overseas service provider to a “global delivery model”, where user organisation are organisation procure services from a range of global suppliers, not just major Indian outsourcers but niche players in eastern Europe for example.
Either users could take advantage of this directly, or they could contract traditional outsourcing suppliers, such as IBM Global services, Accenture and EDS, which have substantial offshore organisations, but which will also benefit from the economies that global delivery offers.