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IT Outsourcing - Recession Survival Kit - Series I

Everybody is talking about it.. Decision makers are contemplating either to invest for growth now or to cut costs to maintain margins.. or do both. well.. am sure people know that these are easier said than done. there are too many theories, hypothesis, advices, opinions and the latest in the list.. 'management books'... trying to use all possible ways of the current situation to make themselves heard.. but what is heartening is that there is good amount of truth and reality in all of these.. as they are directly from their heart.. they have felt it, experienced it and living with it.


Just wanted to share my thoughts on the avenues that are available for executives to survive and sail through the current recession in the IT Outsourcing space... While there are many ways being pondered, let us look at few of the prominent ones in the market.. these are applicable for both type of organizations.. those who are either looking for ways to start outsourcing or those who are already matured in this but are looking for newer ways to cut costs..

Let us look at new Service Delivery Models, as the first among the 3 part series of this survival kit..
 

Innovative Service Delivery Models


Talking of delivering IT services, there has been significant amount of maturity among the companies that outsource IT services to SIs across the world.. Initially, that is around 1.5 to 2 decades ago, companies were more comfortable with 'touch & feel' kind of business. Wanting to know who are working for them, what is that they are working on and with a desire to have full control on the overall engagement. Slowly the situation improved, not bcos of diluted expectations but bcos of the maturity and the rampant acceptance of the IT outsourcing model.

Companies started to believing their IT service partners more and more leading to a more refined delivery model offering 'Managed Services' - Where the provider retains the execution control on the operational aspects of the engagement, having an equal participation on the tactical aspects too, while the customer retains the strategic control of the relationship. The providers became more accountable for the results, to deliver projects within schedule, under or same budget with acceptable quality of work. This model has had great success as it offers a win-win proposition for both customers and providers paving the way for more trust on the partnership.

IT Shared Services Delivery (or can we say 'IT Service delivery 2.0')

One of the most compelling value proposition to customers who are looking at options for supporting and maintaining their applications at low cost but still want to retain their SLAs and maintain high customer satisfaction, is to look at IT Shared Services Delivery model.

A simple definition would be that this model involves a single team, in other words one common pool of IT consultants, supporting multiple customers, round-the-clock, on multiple technologies.

You can look at this option if?
 - You are a mid-to-small sized company
 - Your application landscape is more stable and doesn't involve too many transactional interactions with end users
 - Your landscape includes a large Enterprise Package consisting of too many modules or there are too many small peripheral applications where you may want to have individual module specialists as the ticket volumes are not substantial
 - You are looking at extended support coverage beyond the normal business hours but could not afford the extra costs associated with it
 - You are looking for 'need-based' support - instead of locking in FTEs you want people only when there is work
 - You want to meet unforeseen demands - ability to address any unprecendented spurt in demand with minimal increase in costs
 - You have a highly labor intensive environment where the processes have high repetition rates
 - You are interested to bundle all applicationand infra related support and maintenance into one package and want the best deal possible
 - and more...

This is one model that can give almost all that you need.. the flexibility in services, dynamic pricing, predictability in costs, scalability of operations - all with same service levels and maintaining the customer satisfaction. Try it out..

Comments

Hey, that is a very useful post. Suggestions pointed are really good. The best part being it covered both SMBs and large organizations.

Hi Ram,
Thanks for sharing your thoughts. The post is helpful in making us understand the pre-conditions/business situation in which the probability of achieving improved efficiency level through shared services is on the higher side.
Hope we also get to learn about the business environments that are not very conducive for shared services model and its intended benefits may not be realized to the full potential.

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