According to the “Outsourcing Desk Reference,” a new report released by META Group, Inc., 70 percent of companies are currently outsourcing – with expected increases to nearly 100 percent by 2006. To help CIOs and their organizations through the outsourcing evaluation process, the report maps out a methodology developed by META Group called the outsourcing life cycle.

META Group's outsourcing life cycle is a tested and proven process to drive decision making, vendor selection and ongoing relationship management. The process includes the following steps:

  • Setting the right expectations throughout the organization prior to entering any outsourcing engagement.
  • Identifying the enterprise's short- and long-term business objectives and associated risks.
  • Selecting outsourcing vendors that can meet the business objectives throughout the life cycle.
  • Negotiating contracts with service levels that align with primary business objectives.
  • Managing the outsourcing vendor relationships with a strong, dedicated team throughout the life of the contract.

"The first step should be to articulate primary business objectives before outsourcing vendors are invited for briefings. Don't make vendor selection or negotiation your first step," warns Dean Davison, vice president and director, Outsourcing and Service Provider Strategies at META Group. "Most importantly, expectations need to be realistic and set ahead of time. Incorrect expectations are the primary reason why outsourcing arrangements are perceived as failures."
Outsourcing is a long-term decision that should be made very carefully. The report also outlines some of the most common misconceptions about what an outsourcing arrangement can achieve:

  • IT expenses will automatically be reduced
  • Vendors use best practices
  • Offshore vendors offer huge savings
  • Vendors are simultaneously better, faster and cheaper than internal IT

"While such results might occur, there are no guarantees," adds Davison. "With the help of benchmarking tools, organizations need to weigh the risks associated with outsourcing against the risks of keeping the skills in house."
To learn more about the “Outsourcing Desk Reference” or META Group's Desk Reference series, visit metagroup.com or call (800) 945-META [6382].

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