7 point Checklist to assess the extent of outsourcing in a firm

January 7, 2012: It is always necessary for an IT company must keep the extent of outsourcing in control. Too much of outsourcing will definitely have an adverse effect on the business. But here the question which arises is, how can you know that you have outsourced too much of IT services?

Well, there are some simple 7 points which would help you to understand whether outsourcing is too much.

Bringing in service providers to business meetings

If you have to include service providers in each and every major business meetings then make sure that you have made too much of outsourcing. Moreover, if such situation arises it will affect the smooth functioning in an organization.

Running out of meeting space

According to Strichman of Sanda Partners, if the company doesn’t have enough space for meeting then it is big time for you to realize that you have outsourced too much. Yes, just think of the company’s largest conference room has not enough space for a meeting.

IT leadership teams find themselves as contract jockeys

If you feel that you have completely lost control over operations then it is high time to be more conscious. And if you feel that you need to recruit more number of contract administrators instead of recruiting technologically skilled people then you are definitely off track.

Answering fundamental technology questions has become difficult

If the situation is such that your chief risk officer enquires about the company’s data stored. And you are in such a situation that you have no idea on this and couldn’t give a proper answer. Then again you should understand that you have crossed the limits of outsourcing.

Minimum attention to the outsourced work

When you find that the management sponsors are paying no attention to the outsourcing initiatives. It is definitely a sign that you require to put an end to the outsourcing strategies.

Mismatch between transaction costs and the benefits

Find out whether the transaction cost is very high then the benefits you get from outsourcing. Sometimes you might have more number of suppliers. But you need to analyze the amount of benefits that you avail form the suppliers.

Drowning in change orders

If you notice that a simple change in the organization requires major paperwork. Then it’s time for you to be more conscious. Because the governance team inside your organization is helpless as the team cannot take a single decision. The main reason behind this situation is that the influence of vendor’s approval process is inevitable in most of the situations. And thus it will affect the strategies for making improvements inside the organization.

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