The Value of Outsourcing

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(topic: "Benefits of Outsourcing", Image to the courtesy of http://www.cisco.com/en/US/technologies/collateral/tk869/tk769/images/white_paper_c11- 466573-02)

When the 90s Tech Boom occurred, with the coming of the internet and localized networks being able to share world wide web space, came the greater need for IT outsourcing. Free Markets as well as government saw that the skill sets of highly specialized people could be hired on as contractors for good reason. With the evolution of technology coming into professional work spaces as well as the consumer space. Pretty soon technology had not only become a way to streamline organizational workflow but also as the increase in the evolution and sale of entertainment, household, automobile and other purchases amongst consumers since then. With this came the need for maintenance as well as the knowledge base for advancement.

Free-market organizations and government saw that like in the evolution of any industry, there would be the need to retain regular maintenance staff as well as the need for specialized hands. It became apparent that there was an abundance of technology, technological changes and advancements in technology which made having a set of human capital which had not needed to keep formally upgrading their skills made them a stagnant cost to operations. This leg of human capital caused their organizations to suffer the resistance to change while not smoothly integrating technology then began to pass this behavior to some of their subordinates to defend later. This old theory was that if someone stays around long enough they would be better off in senior positions. This thinking was one of the reasons why often internal linear and vertical advancements were better off being made internally. However, in the time we will live in, turnover is inevitable when it comes to human capital. The need for highly skilled human capital as well as current staff keeping upwith changes in the industry made for a new sub sector of sectors called “outsourcing”.

Today’s IT Contractor and Consultants come as either in house members of outsourcing companies like Infosys, IBM, Wipro, Telus, Accenture, Sierra Systems as well as many others or as independent contractors. Independent contractors, who often duel themselves as consultants as well, are incorporated businesses of their own. They are usually incorporated, they have several ties in through the sectors they have worked in and are project completion, full lifecycle type of workers. The in-house contractor or consultant often receives work orders from management where there is an Account Manager, a 3-tier sales division for bidding, meetings and closing deals not to mention, ateam to rely on with any help they might need when dealing with a client. The independent contractor has to be their own Account Managers, Project Bidder, Presenter and deal closer not to mention do the marketing, build vender channels, have a legal team while maintaining book-keeping and accounting firm relationship as well. The hard-technical skill sets are the same but where the “pick” between the two is usually a life style decision for most people who choose these as a career.

Today’s firms, when looking to extra hands to do project work, work with firms and teams who, at an understood cost can support there other needs such as vendor, marketing, legal, financial and support channels. When firms who are only looking for a contractor, they’re going to see where the best value added is. I’m not saying one is better than the other, I’m saying for more high priority the projects only the most reliable people are needed. If these outsourcing firms and independents can benefit more linear and vertical work-flow channels for a better “project end”, they more likely to win bids.

Contractor-ConsultantworkinginaOutsourcingfirm -usually have worked in several sectors

-contractor works on teams both internally and externally

-Firm has an Account Manager team

-Firm has a Marketing and Sales team

-Firm has a recruitment and staffing division

-Firm has a support team

-Contractors have clients and client projects assigned to them

Contractor-ConsultantworkingIndependantly -usually have worked in several sectors

-Acts as their own Account Manager

-Does their own Marketing and Sales

-Finds their own sub contracts and sub contractors

-Really experienced independent contractors and consultants have their own support teams and contracts with their partners

-Contractors have to bid for projects and work directly with the client where the client manages the deliverables unless assigned to the contractor on a consultancy charge

This paper has attempted to describe why firms outsource projects as well as the advantages to long term outsourcing. This paper might provide some insight into any increases in turnovers and temp worker statistics. Contractors and Consultants are not temp workers but rather a business, usually with Incorporated Tax status at higher levels. Outsourcing benefits business and organizational operational work-flow. It is a cost saving measure when attempting to integrate complex solutions into time sensitive situations requiring a skill set that might not be fully

available for use.There are many financial, legal, competitive, operational and work-flow advantages to outsourcing. Outsourcing teams are considered a cost to the business for competitive advantage and operational cost saving measure. The liability of project completion and success are partly shared. The independent contractor, like the teams of people which come with consultancy firms, are perhaps the most skilled people in the field making them a great benefit for both time to complete and cost to complete whether you choose waterfall or agile iterative approaches. Some of the contractors are more skilled technically while others might carry a better understanding of organizational behavior while skilled in various different technologies. If they are not experts in just one field then perhaps, some skills in many areas which are not only enough to get work done well but, in less time than that would normally be required of an in house team. That’s why they do this line of work –Outsourcing. A major operational and work-flow advantage includes not having to shut down or even slow down where regular staff can remain operational while an outsourcing team or independent contractor can be working on a project managed by a small division of your firm. I am not saying outsourcing is the only way to go for good work. I'm saying it has been proven that outsourcing in technology has lead to a sub sector of highly skilledand smart strategic thinkers being put the test for the benefit of themselves, the industry and their clients.

Author: Randeep Dosanjh

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