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IT Outsourcing: What's Next?
If you are in the IT industry and haven't lived in a windowless room with any access to the outside world, you've undoubtedly heard about the continued growth of outsourcing. Or is that offshoring? Or near shoring? Or is it all of the above?
Businesses have now been exploring different business models for leveraging lower cost labor, globalization and external core competencies. There have been glorious successes of outsourcing--as well as catastrophic failures. As we near the 10-year mark of the inception of the outsourcing binge, let me lend my thoughts into what the next 10 years will hold in terms of the evolution of the outsourcing trend.
Focus on TCO
As companies have gotten into outsourcing contracts and global outsourcing agreements, what has become apparent is that outsourcing and globalization are not without overhead. Whether it is in detailed contract negotiations, vendor management, communication governance or extensive travel, overhead in outsourced agreements can significantly reduce the sweet deal that you saw on paper. It is important to consider all of these overhead characteristics when entering into an outsourcing agreement and base the outsourcing decision on TCO of the outsourced operation vs. the current operation. You may find that alternate business models aside from a purely outsourced model might be better suited for your company.
Mix …
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