Outsourcing business is governing the business world today. Irrespective of whichever sector you consider you are likely to find some kind of outsourcing taking place. One of the most striking trend in the outsourcing business is offshore outsourcing strategy. Offshore outsourcing refers to outsourcing work in a foreign location. Companies designate a part of their business or the whole business to companies located abroad. This strategy of offshore outsourcing has become a huge success as it helps companies reduce their overhead costs to a great extent.

Outsourcing gives you the opportunity to play on a global scale and business strategy makes outsourcing a necessary sourcing strategy. Sourcing itself is not a strategy but business strategy is something that drives the sourcing decision.

Business strategies can differ tremendously and so will IT sourcing strategies. Strategy is to acquire other companies, and integrate their customer base, which in turn requires integrated IT systems. IT sourcing strategy must, therefore, map to business strategy and be flexible enough to allow the business to make radical changes to adapt to changing market contours. One key advantage of outsourcing, is to support a business strategy of rapid expansion without time-consuming scaling up of internal IT and the up front costs that requires.

Users often have expectations that they will remain the valued customer they were at the contract bidding stage. The outsourcer has to grow his business, and get new customers. Another potential expectation is that outsourcers will see the world the same way as their users. That may not be so, particularly if their nationality and culture differs.

You must have shared business values, not just between the outsourcer and the user, but with the user’s own customers. Moreover, you should never underestimate the amount of coordination that is required as everything always takes longer with distance.

Flexibility and goodwill are also equally essential as service level agreements and price, which may not be considered as an important issue in comparison because everything about the contract will inevitably change over time, often rapidly, making re negotiation necessary.

Make sure that you change management clauses because everything can change during the outsourcing term. Not only will IT requirements inevitably change to track business changes, but also there will be personnel turnover on both sides.

It is critical for you to have a way to recover your intellectual property, your data and your systems. Always keep in mind that if your supplier is in trouble, you are in trouble too. Law courts simply pick over the bones of both. The judge won’t have a clue about IT, neither will the jury.

Outsourcing is such a key decision, running part of the organization that is critical to daily operations and future survivability of the business by enabling business change, the key to successful outsourcing, is the relationship. So you should maintain ample trust and transparency in your relationship.

Keep in mind :

• Business strategy is the key driver in the outsourcing decision.
• Don’t outsource a problem re-engineer your processes before outsourcing them.
• Don’t seek to outsource risk, corporate governance regulations disallows it.
• Don’t allow outsourcing to dangerously skill your company in vital competencies
• Costs must factor in the out sourcer’s marketing costs and profit margins.
• Business and requirements will change. So, build in flexibility and re negotiability.
• Detailing work, service levels and price are less important than setting out partnership, relationship and problem resolution terms.
• The contract and the relationship must be designed to be independent of those that initiate them.
• Engage your own marketing people in contract negotiation.