Cutting out all the red tape can be the icing on the cake

By Rob McConnell
Tuesday, 26 May 2009

When the state of New York recently established a hotline for citizens concerned about swine flu, it caused a furore.

Not because it was unsuccessful — it handled 50,000 calls in a matter of days. And not because it was slow or unresponsive — most calls were answered within two rings.

Instead, the anger stemmed from the fact that the call centre handling the enquiries was based not in New York, but in Newfoundland, Canada, 1,200km away.

The state hired the Canadian company Telelink (www.telelink callcentre.com ) because it had already successfully handled calls from citizens worried about another health scare — an outbreak of hepatitis A in western New York.

Unions, however, said the work should have gone to the 9,000 government employees whose jobs are to disappear as part of a budget-balancing exercise.

It’s just one of many examples of how outsourcing can never please all of the people all of the time. But it’s a long-established business practice, particularly in the IT field.

After all, few companies have the range of expertise needed to carry out major IT projects in-house.

Now, however, comes the idea of “speed sourcing”. It originates in America, as many of these trends do, and it’s designed to cut out some of the bureaucracy involved in pinning down a watertight outsourcing contract.

The outsourcing consultancies EquaTerra (www.equaterra.com ) and TPI (www.tpi.net ) are just two of many companies who advocate speeding up the process to deliver faster savings and quicker return on investment in these financially straitened times.

Typically, establishing an outsourcing contract can take anything between six and eight months — especially in the more litigious atmosphere of the US. Speed sourcing aims to do it in less than 12 weeks.

One major clothing manufacturer, which refuses to allow its name to be disclosed, managed it in six.

EquaTerra likens it to taking a piece of granite to sculpt the figure of a horse. In a typical outsourcing arrangement, you get precisely that — a horse.

In the speeded up arrangement, the contract gives you only the outline of an animal that looks vaguely like a horse, with the detail to be added later.

In other words, the minutiae are not covered — only the high level stuff, such as “we can improve your IT operations over a period of two years to deliver savings of 30 per cent”.

It’s enough to give a solicitor palpitations. The rewards — faster results and much-needed savings — have to be balanced against the considerable risks, namely differing expectations between customer and provider and the fact that the contract can be vague, to say the least.

The Government provides a useful checklist on its Businesslink web site for anyone considering outsourcing. See it at http://preview.tinyurl.com/p26uds.

It’s fair to say that outsourcing has changed dramatically over the last 15 years or so, and speed sourcing is merely the latest manifestation of it.

One thing is for sure: the downturn is the ideal opportunity to challenge outsourcing providers to make a long-term contribution while providing a shorter-term cost advantage.

That’s precisely the point made by this article in Computer Weekly magazine: http://preview.tinyurl.com/pa4fpy.

It’s important to remember, however, that cost is only one element in the decision to outsource. Equally important is the expertise that an outside provider can bring — and the fact that such providers are independent.

Because they usually specialise in one particular sector of IT, they will often come up with solutions that an in-house team may miss in its efforts to manage every aspect of the job.

The best way I’ve heard IT management described is that it’s a bit like electricity. You don’t need to own or operate the power station yourself.

All you need to know is that the electricity works when you flick a switch.

That’s outsourcing in a nutshell. The fact that it almost always saves you money is the icing on the cake.

Rob McConnell is regional director for SQS NI. (www.sqs-uk.com ). His e-mail address is rob.mcconnell@sqs-uk.com

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