Sherry- Find some thoughts inline. I used to manage (and sell) large scale IT outsourcing for one of the big outsourcers as well as oversee offshore delivery teams.
Let me know if you have any questions. Thanks, Brian Desmond br...@briandesmond.com c - 312.731.3132 From: Sherry Abercrombie [mailto:saber...@gmail.com] Sent: Tuesday, October 13, 2009 7:58 PM To: NT System Admin Issues Subject: Outsourcing Discussion Guys and gals, I've returned to college this fall after about 15 years to finally finish up a degree I started on about 25 years ago. One of my classes this semester is Macro Economics. Last night my professor gave us an essay question for a test next Monday that is potentially 50% or more of our test grade. The topic is on outsourcing and I wanted to toss this out for discussion, input, personal experiences etc etc. The questions I have to answer are: What is the economic justification given for outsourcing? [[Brian Desmond]] See my other reply down below about benefits. These days there are key buzzword that the share holders want to hear, see numbers from them on paper, etc. These things are somewhat cyclical. In a down economy, consultants spend a ton of time doing studies and writing plans for consolidation, outsourcing, etc. They might start to implement it, but, by the time the project has momentum the economy may have rebounded and it stops being shiny and people forget about it. I'm certainly seeing this in the current economy and with relation to the previous downturn earlier in the decade. Where is the outsourcing taking place? (Obviously, I'm focusing on the IT field, specifically technical support) [[Brian Desmond]] Not positive I follow as to what you mean by where. As in what jobs or where geographically? In terms of jobs, basically any IT level job below an architect level position (e.g. operations and project implementation) is typically in scope for an outsourced services deal. Some customers elect to put the architect level jobs in scope. They are generally in for a world of pain in my experience. Geographically, the common centers are categorized into a few tiers - "offshore", "near shore", and "on shore". These are in ascending order of cost. Offshore locations typically include (but are not limited to) India, Malaysia, China, and Phillipines. Near shore locations may include Mexico, Costa Rica, Panama, Bulgaria, Czech Republic, and Slovakia. Onshore is the United States, Canada, Australia, Singapore, Western Europe, Japan, etc. What types of jobs are these workers performing? [[Brian Desmond]] These workers perform all manner of operational tasks. Service desk (help desk) is typically in scope as are tiers one through three for operations. Depending on the outsourcer tier three may be offshore/nearshore or onshore. Some deals have a fourth tier which is exclusively onshore. These fourth tier folks would be equivalent in skill and experience to the customer's existing senior level IT operations folks. Any sort of break/fix, monitoring, ticket based action, phone call answering, etc is very much so in scope for tiers one through three. Typically my advice to IT folks who are worried about being outsourced is that if I can script your job you need to be improving your skills. What is the benefit to the business? To foreign workers? [[Brian Desmond]] Key benefits to the business (in my opinion) are highly predictable costs and in some cases reduced costs (hard costs anyway). These deals are often priced ala carte. So as a customer you pay the outsourcer a fixed fee per server managed, then you add a fixed fee for roles (e.g. SQL, Exchange, etc). Sometimes its' also partially priced per user, so, if you add a user to Exchange you pay $X. Compared to running inhouse, this is very easy to figure out your costs. You know exactly what anything will cost you (adding a server, adding 100 employees, etc). Hard costs can also be reduced as when you outsource you are forced to centralize your IT. Decentralized IT costs a fortune. It is simply not economical to have 300 offices with 300-600 IT guys. Soft costs will go up though but those are rarely measured. The benefits to foreign workers are pretty simple. They have a stable job for a big company and a career path. In some offshore locations, hierarchy is incredibly important in the workplace. Who you work for and what your title is has a significant impact professionally and socially in these cultures. I talked with my professor and told her what approach I wanted to take, from the end user perspective, and that I had experienced the tech support being outsourced. She liked that idea a lot. Obviously, I will be looking for other news articles to support my essay. What I'm looking for is thoughts, opinions, personal experiences from an end user perspective, has anyone here been outsourced? What was that like? I'm just taking an informal poll from a group of my peers that I know has had personal experience in some way with this subject. [[Brian Desmond]] The important thing that I always talked about was the outsourcer understanding the customer's business. When you're an employee at ABC Widgets Manufacturing for a while (even six months), you know what your employer does. You know what makes the company tick (the production line is rolling 24x7) and what makes the company lose money (the production line is stopped). You know that the engineering centers don't do work if the license servers for their CAD programs aren't up. You know that the production line stops if label printing is down. You can use this information to a) translate an end user's problem statement into a technical problem and develop a plan and b) you can prioritize when you have multiple problems, have budget to allocate, etc. You also just plain care if the company is making money. Your bonus might be tied to it. Your stock might be tied to it, etc. With an outsourcing situation, it's highly unlikely that your outsourcing partner's employees will ever be able to have this level of understanding of your business. The ones who do will be the onshore employees who are top of the line, and you will not engage with them often because the ratio of offshore to onshore is big. You have a lot of turnover in the global delivery centers and even if the folks who work there figure out what's going on, they'll be gone before they apply it. Also, none of these people have any incentive to perform at the highest level in the eyes of the customer. They are measured by the outsourcer's performance plan, not yours. If their bonus is tied to billing, that is more important at the end of the day than your labels being printed. The outsourcer has service level agreements with you as a customer, and there are penalties tied to these. At a management level the outsourcer will make process changes as necessary to salvage their SLAs, but, at the end of the day the degree to which this makes it to the guy at the end of the line who you are engaging with is likely to be slim. Try to keep it on topic, I did get Stu's OK before sending this, so a big Thanks Stu for the use of these lists to help with my exam. -- Sherry Abercrombie "Any sufficiently advanced technology is indistinguishable from magic." Arthur C. Clarke Sent from Haltom City, TX, United States ~ Finally, powerful endpoint security that ISN'T a resource hog! ~ ~ <http://www.sunbeltsoftware.com/Business/VIPRE-Enterprise/> ~
