“A very key element in creating a successful IT service partnership or outsourcing agreement is that each party truly and thoroughly understands the expectations of the other party.”
On Where Outsourcing is Heading
There is a greater interest in business process outsourcing (BPO). Expect to see more situations, like our recent agreement with CNA, in which BPO and IT are intertwined. Customers are starting to feel that business operations and IT operations that support them should be more interrelated. Industry knowledge is key in business process outsourcing. That’s why CSC has put so much focus on vertical industry expertise.
On Economic Trends
I believe that the outsourcing trend has reached a maturity such that it is really independent of economic trends. Saving on IT costs is only one and often not the primary reason companies outsource. The myth that outsourcing is for companies with poor health has long been put to rest. People are outsourcing to gain competitive advantage by moving more quickly to get to new technology. And skills are very hard to come by. There’s the whole area of commercialization. You saw it at Dupont. We had it at Hyatt. Several competitors have structured similar deals where companies are looking to take an expertise or product they have and put it out to market, but they lack the knowledge and capabilities of how. They view it as an opportunity not just to reduce cost, but a real opportunity to generate revenue from an asset or skill they’ve developed over the years. That’s another reason companies are looking to outsource.
On Customer Relationships
Customers are looking more for a true partner, not a facilities manager, and the requirements they put in their RFP reflect this fact. So you find yourself in relationships that require a lot more flexibility and creativity, especially when you get involved in the large deals, which is something we’ve been fairly successful at in the last two years. They really are different. Every one of them is totally different. You can’t come in with your offering and get the customers to adopt things your way, because every one of these customers want something that’s never quite been done before.
On Biggest Concerns
A very key element in creating a successful IT service partnership or outsourcing agreement is that each party truly and thoroughly understands the expectations of the other party. As deals are becoming increasingly complex, this understanding becomes a greater challenge. The flexibility that companies want in their arrangements causes both parties to do things that have never been done beforeexpand services into totally new areas. And if you’re not careful, misunderstandings of expectations can result. It is in our and our customers’ best interest not to let this happen. Because of the fact that we’ve been involved as a company in some of the more creative deals, we have had the opportunity to find out how important this is. When you do the kind of creative things with Hyatt, JP Morgan and now with Dupont where we’re doing things that have never been done before, you really need to take the time to make sure everyone understands what’s expected.
On Considering Outsourcing
Companies outsource for a lot of different reasons. Make sure you understand why you’re doing this. And think about how these active organizations within the company will react. Your ultimate objectives could and should influence your selection of an IT partner. Secondly, understand your IT partner, because this partner is going to become an integral part of your day-to-day operations. Choosing a company with a culture and a philosophy that’s going to be compatible with your own is every bit as important as choosing a company that meets your basic skill and experience requirements for the ultimate success of a 5 or 7-year relationship.