Trending Problems: Expectation vs. Reality in IT Outsourcing

The current U.S. economy is in a state where the dollar is strong compared to other countries. This enables stronger buying powers for companies seeking to outsource software development and services overseas.

Whether you are seeking to free up your own resources to focus more on adding value or you do not have the skillsets in-house to accomplish your needs, outsourcing is a logical step for some companies. However, it is not without its own challenges.

Outsourcing IT Services

When outsourcing IT functions such as your Help Desk, there are 3 primary things to consider throughout the process.

  • Integration of corporate mechanics and operating procedures. No two organizations run the same, so you cannot expect outsourced services to come in and take over your Help Desk overnight.  The primary way to indoctrinate an outside vendor is to have their primary points of contacts job shadow internal IT operations for 3-6 months. This will allow for vendors to have on the job training to your unique business mechanics, approaches, reporting structure, and culture; prior to the execution of full-time outsourcing.
  • Establishing a clear line of responsibility. It is important to set the contractual roles and responsibilities of the parties prior to the execution. This will eliminate the confusion of what areas of IT are staying in-house and what areas the vendors are responsible for. Perhaps using RACI table may be a good starting point to identify areas of potential overlap so policies can be draft to prevent gaps. Even outsourced workload requires a fair amount of management and supervision, this is not a “set it and forget it” approach. Vendors are very good at basic/standard operations; however, the use of custom business applications will not fall into their area of expertise. You will need to dedicate some resources into ongoing management of the vendor. Some companies I have spoken to have set the responsibility of managing outsourced Help Desk support into the Human Resources department as they are often set up to manage satisfaction on internal quality metrics.
  • When outsourcing abroad, there may be some communication challenges. The aspect of outsourcing overseas may often sound appealing, but there may be communication issues to prevent clear understanding. While vetting vendors, you may want to pay attention to the clarity of their verbal people skills. If your internal customers are having difficulties communicating with outsourced vendors, then they will bypass them and find their way right back in the IT department’s offices.

What are the concerns with the speed of outsourcing development?

When a CIO does not have development expertise in-house, a logical thought process is to outsource. Outsourcing has many perks such as inexpensive labor costs and continuous work flow around the clock, but there are several things to keep in mind.

First and foremost is the location of where data is being stored. If sensitive information is stored overseas, then you may very well be in violation of regulatory bodies and your own business agreements with customers. If information is leaked, the business associate agreements may be voided and leaving your company on the hook. If they are not voided, then you could find yourself going to court in another country.

When intellectual property is concerned, the executive teams may want to substitute sensitive data for dummy data for development. This is not only true for the development of software, but as well as, the transfer vehicles being used, i.e. Dropbox, OneDrive, or an FTP. You as the CIO want to be sure that all risks of leaked information are mitigated and assessed as you are not only protecting your information, but your customer’s information as well.

When it comes to outsourcing, it is just like most things; it has its pros and cons. The more a CIO can think through potential risks and challenges before getting a project rolling, the better off the results will be.

If you are facing some unique business challenges that are keeping you up at night, bring them to our CIO MasterMind Discussion Group. The CIO MasterMind Discussion Group is a virtual roundtable for CIOs and CISOs to seek feedback about their current challenges from their peers in a safe, constructive environment. The goal of this discussion group is to give you, the IT Executive, a place to seek out solutions for problems that you are facing in the industry.

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