Tech outsourcing vendor evaluation: Essential guidelines

Jet Airways recently signed a tech outsourcing agreement with IBM for 10 years. Here’s what Jet evaluated before zeroing in on Big Blue as the partner.

Technology leads to business transformation. However, many a time, as a result of excess involvement in technology operations, companies tend to compromise on their core operations. Thus arose the concept and practice of tech outsourcing, and many companies today actively follow this approach. For example, Jet Airways recently signed a 10-year business transformation and IT services agreement with IBM valued at $62 million. The deal will help us to focus on our core business and improve operational efficiencies.

But how do you actually evaluate partners while looking to opt for tech outsourcing? Read on for a few tips derived from my experiences.

Domain expertise: While looking for tech outsourcing, looking for domain expertise is a must. The IT needs in the aviation sector are different from what they are in the manufacturing sector. A manufacturing company may have a SAP ERP or an Oracle ERP which might fulfill most of its requirements. On the other hand, an aviation company would have completely different requirements. That is why domain expertise is required to manage a company’s IT operations. In our case, IBM’s domain knowledge will be leveraged by Jet to address our business transformation objectives.

In-house applications: There are a large number of applications which companies develop in-house. When you go in for tech outsourcing, the source code of all these applications are also given to the vendor. You therefore have to ensure beforehand that the vendor will handle this data carefully.

Human assets: Another important point to be remembered while looking at tech outsourcing is that, in addition to the IT assets, the human assets must also be taken care of. The vendor should have the ability to take employees on board and manage them well.

Input: While looking at tech outsourcing, evaluate the vendor on the best practices he will bring to your company. This also includes various aspects like the ITIL implementations and the ability to meet changing regulatory requirements.

Duration of relationship: When you are looking at tech outsourcing, consider the duration of the relationship. There are certain advantages if the relationship is intended to last for a long period. As time goes by, the outsourcing relationship will be strengthened, and the vendor will look for ways whereby the client’s internal efficiencies can be improved, costs reduced, and revenue opportunities increased.

About the author: R N Moorthy is Senior General Manager (IT) at Jet Airways.

(As told to Anuradha Ramamirtham)

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