IT Outsourcing Risks

I was fortunate enough to be asked to give a brief talk on IT Outsourcing (something near and dear to my heart) by Insperity.

Along with Beth Mullaney from Rankin McKenzie and Jaimie Kasopsky from Insperity, I discussed the pros and cons of outsourcing at the Business Owners: Outsourcing 101 – IT, HR, and CFO Functions event at the City Club in Raleigh.

You never know how these type of talks come off but I didn’t notice that anyone fell asleep so I’m going to count this as a win.  While there was a lot to the talk, I wanted to share just the Cons, or Risks, of outsourcing IT here;

Getting “Locked In”

Many outsourcing agreements are structured as 1-year, or worse, 3-year agreements that aren’t easily broken. Makes the decision on what partner to choose a weighty one with far reaching consequences. Stand your ground on a reasonable term!

Employee Morale

Your staff may be used to calling John down the hall. The impact of letting John go and outsourcing his job to a firm needs to be carefully considered.

Control

Providing an external company with access to your systems and key company data can’t be overlooked – pick a reputable company and avoid Mom-n-Pop shops that often lack proper security controls and typically experience above average employee turnover

Lack Of Results

Not getting what you paid for? See Getting “Locked In” – Be clear on expectations once the honeymoon is over. Insist on an exit ramp.

Not Outsourcing Enough

Outsourcing should be all or nothing. Why? Because if your vendor “owns” it, there is one throat to choke. If you hold back or dilute the responsibility there will be finger pointing.

The Wrong Agreement

An hourly support agreement doesn’t automatically force your provider to be accountability – it just results in constant overages, surprise bills and paying to fix the same thing over and over.

Lack Of Process

A “real” IT Outsourcing company should have in place the same process and discipline necessary in a large IT shop (essentially that is what they are). Ask for examples; ex: “Can you show me your support desk procedures” if they can’t show you this then they aren’t process driven and your results will be random.

Pricing Methodology

If you vendor prices based on the number of widgets in your environment you will end up with more widgets!