Outsourcing – Is This for You?

As Operational Line Manager and Resource Manager, your job is to ensure that the wheel is turning all the time.

Business engages IT to deliver a solution/product in a cost-effective way. Business does not care whether the solution is developed and tested in-house or it is outsourced to an external vendor. All business cares about is that the product/solution meets the requirements, is delivered within budget and time, and does not have operational issues after Go Live (no sev-1 or sev-2 defect).

How IT does resource provisioning and development/testing is essentially part of the operating model.

Recently one of my team members had an email exchange with a business representative. The premise of the conversation was that IT does not have in-house resources. So the business representative (lets say Jane Doe) was requested to provide scope of work for the next 6 months so that the work can be packaged as a SOW (Statement of Work) and can be given to an external vendor to deliver.

Jane was not pleased with this advice.  Her position was that the outsourcing of this work to an external vendor is a resource model for IT and as such she should not be asked to provide scope of work for the next 6 months. While she can provide some scope of work, it will not be the complete scope as the work needs to be delivered in an agile manner.

When faced with such challenge where you do not have available resources to do the work, as IT Manager what do you do to ensure that the wheel is moving and IT continues to deliver to business?

In my experience (and it is a substantial one), outsourcing is a double-edged sword. Before an outsourcing model is adopted, there are few things that need to be in place:

  • Is the organization ready for the model? Have all the staff been briefed about the changes and the impact this will have on the IT delivery? Remember, the entire organization has to collectively embrace this model. Unless you have a buy-in from your staff, it will be a tough uphill battle!
  • Is there a strong knowledge framework in place? Do you have SME knowledge on the floor to train the new staff from external vendor?
  • Does the vendor have good resources to take over development/testing/operational support?
  • Does IT Commercial have the framework to quickly onboard vendor resources including paperwork, login ID, access to network and tools etc.?
  • Is there a framework to ramp up vendor resource demand pipeline, if required?
  • Are there plans for KT (Knowledge Transfer) sessions and playback sessions? How will that work and how quickly can this be completed?

Remember, before a contract is granted, all vendors will claim to have the required knowledge and capability. It is only when the contract is granted and you need to ramp up the work, you get a measure of the vendor’s capability as well as your readiness for the outsourcing model.

Sometimes outsourcing is not just a necessity, but it is part of an organization’s strategic direction. In that case, as Resource Manager, you need to be aware of things that can go wrong when you decide to outsource work to an external vendor.

  • Your resources can leave, sensing that their jobs may be at risk
  • The KT between SME and external vendor may be inadequate
  • Vendor may have difficulty in procuring enough skilled resources for the work
  • The quality of the work by the vendor may be below expected standard

This is where you vendor management skills come into play. As Operational Line Manager, you MUST have processes to address these issues.

  • You must have built a strong knowledge framework so that there is no Single Point of Failure
  • You must retain your SME, if possible, to guide and oversee vendor delivery
  • You must have below sub-processes for vendor management
    • Clearly defined RACI model and roles & responsibilities
    • Standup meeting between Operational Leads of organization and vendor, culminating into daily and weekly status report
    • Weekly report to the Governance committee
    • Process to monitor budget expenditure
    • Process to monitor burn chart of daily progress by vendor
    • Process to monitor ongoing operational issues and remedial approach
    • Framework for continuous improvement of vendor delivery framework
  • You must keep senior executives informed of all issues and remedial actions

It should be clear to you by now that there is NO magic bullet to the outsourcing model.

Is it for you?

Sometimes this is not your call and you have to follow the strategic direction of the organization. Sometimes you may have to take this path when you do not have enough in-house resources to deliver a work to business. Either way, you will always face challenges and sometimes you may have to take some hard decisions. It is how you handle those decisions and the transitional period, that will define how good a Resource Manager you are!




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