Outsourcing is defined as the contracting out of an internal business process to a third party organisation. In the generation or so since the term first emerged, it has been applied widely across many sectors, particularly in relation to IT functions, but with varying levels of success.
At its worst, I’ve seen charities entrust their entire IT operations to IT outsourcing 'experts', whose only real expertise was in squeezing as much money out of the contract as possible and delivering as little service as they could in return.
Equally, however, I’m aware of many examples of carefully selected and properly managed outsourcing arrangements that provide the buyer with exceptional quality and value.
So how do you decide what’s suitable for outsourcing? And once you’ve made the decision to go down that route, how can you ensure it is successful?
A favourite mantra of management consultants is that organisations should focus on their core competencies, devolving responsibility for peripheral functions to third parties.
But what exactly is a core competency? And how much of the rest of what you do should you contract out?
A few years ago I was tasked with restructuring a major NGO’s failing IT-support function. I used a simple logic to determine what we should buy in and what we should do for ourselves.
For me there are essentially two types of IT-support activity: the first is task-based – in other words, regular repeatable tasks that are time-bound, documentable and can be carried out by anyone who has basic skills in that discipline. These tasks are all potentially outsourceable.
The other could be called knowledge-based – the types of activity that occur behind the scenes and require a more detailed knowledge of the nuances of the organisation and its systems. These tasks are best carried out by people who are part of the organisation and are less suited to outsourcing.
The shape of my restructured department ended up as a co-sourced arrangement, meaning that the front-line services, such as the helpdesk and deskside support, were outsourced; the more specialist roles, such as network, server and application support, remained internal.
That mixed-economy model was very successful. It saved a six-figure sum annually, and five years later it is still in place.
Outsourcing does not relieve the organisation of its responsibility to manage the overall service. You’ll still need people internally to work with the supplier. And the pitfalls of outsourcing can include an irreversible loss of internal knowledge, institutional memory and skills, a lack of commitment to the mission by third party staff and overly optimistic predictions of savings that omit the hidden costs.
On the upside, a good IT outsourcing provider will have access to a far wider range of people and skillsets than most charities could dream of, and have the flexibility to scale to your demands.
There are many decent companies out there, but ultimately they’re all commercial organisations. You might be a charity, but they’re not; so having crystal-clear contracts in place and defining exactly who is responsible for what will avoid future misunderstandings.
The most successful outsourcing arrangements are based on partnership and genuine mutual benefit, whereby the outsourcing partner is a trusted ally rather than just a whipping boy that takes the blame if ever there’s an issue.
Andrew Brenson is an IT consultant for the charity IT specialist itlab