The information technology (IT) outsourcing industry was launched by an explosion of rapidly changing technology and companies’ needs to access benefits of that technology at the lowest possible costs. The bottom line was cost containment.
Today, that line is a bit blurred. Although cost containment continues to be a major issue, many companies have other goals as their primary reasons for outsourcing. The result is a different look in relationships, as companies and their outsourcing vendors push beyond the old parameters to determine ways of achieving new goals together.
Following are profiles of some of the new relationships in the marketplace today.
An automotive company known for its conservative image joined forces with a hard-driving, fast-moving vendor to zap its corporate culture with a new burst of energy. Cost was not an issue. The goals were to change the ways the auto company responded to customers and shareholders and to deliver the same level –or even higher–quality product in shorter time. The two companies formed a risk-sharing partnership that addressed everything from increasing stock turn to improving time to market.
An insurance company went looking for a vendor armed with a wish list. Although cost containment was a factor, it was not the most important factor in the selection process. Insurance executives wanted an outsourcing vendor that could help their company be more competitive and improve their direct customer service levels. Their vendor provided consultants who specialize in applications development and technology integration. Those consultants now are helping internal clients in the insurance company develop competitive solutions.
Sometimes relationships can undergo a complete metamorphosis, as goals and needs change. A financial services company hired a vendor to do a study of problem and change management in the data center. From that study evolved an outsourcing management contract. After a period of years, the needs of both client and vendor changed. When the client and vendor got together to structure a new deal, they both got what they wanted. The client reassumed control of the data center, and the vendor won the opportunity to expand its role into business consulting and applications development.
Each company has its own needs to be fulfilled by an outsourcing relationship. Some companies are driven purely from a need for a technology partner. Others have global operations and need partners whose footprints mirror their own.
Still others have industry-specific needs for systems application development. In these cases, cost containment may slide several notches down from the top of the priority list. One of the most important things happening in outsourcing today is the increasing awareness of the unbounded potential for outsourcing relationships.