Key learning’s on managed network services outsourcing

With increasing pressure to reduce cost, businesses are increasingly outsourcing their Information Technology (IT) functions to third party service providers. In addition to cost cutting there are other advantages such as access to better technology, expertise and improvement in performance.

There are many risks associated with outsourcing when it is done without considering the service delivery model systematically. They following are the key points that the outsourcing has to keep in mind while outsourcing managed networks.

  1. Process should be simplified. The process that is to be outsourced should be broken up based on the functions, which will help the firm in service tower termination. This will ensure termination of specific service contract without affecting other services. The outsourcing firm should include provision to terminate the contract if the service provider does not perform as required.

  2. Service level agreements should be transparent. The service level agreements should be framed taking into account the duration and severity of the issue and the number of defaults. Remedies should be specifically mentions in the SLA. It should include:

    • Escalation of the issue to the senior executive of the service provider

    • Period review with the executives of the service provider

    • Steps to improve performance

    • Root cause analysis for issues with first level severity

  3. Avoid bargaining for cost reduction. Bargaining for price reduction beyond a certain level will make the relation with the service provider and the quality of service less tenable. Less flexibility will be provided by the service provider along with poor resource assignment and poor service.

  4. Include operational parameter while developing sourcing strategies. The firm should document all activities starting from the placing the order to the expiry or termination of the contract. It should contain all the possibilities that may come up during the term of the contract. All the steps in the addition to key performance indicator should be documented in the contract. This will ensure better performance from the part of the service provider.

  5. Ensure internal ownership of the IT network. This will help in aligning IT with the requirements of the firm. It will also lead to developing expertise in the area, which can be used to assist the handing over of managed services to the third party service providers. The result will be better understanding between the firm and the service provider which will enhance the outcome of the contract.

Outsourcing IT and associated services to third party service provider do have risk associated with it. But with proper risk mitigation plans, significant benefits can be derived from outsourcing managed services.

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