Wavestone US
Wavestone US

Providers of outsourced services love to talk about how much money they will save you on salaries and benefits, and they should, considering how significant those expenses can be for most organizations. But unless you understand and quantify—and then negotiate for—the improved business outcomes that come with outsourcing, you could easily find that your bottom line was better served by permanent employees providing those services.

In the case of IT services, salaries are easy to quantify, the business value of those services less so. So you need to approach the issue of outsourcing IT services very carefully, making sure that your corporate priorities are served, and understanding how the value of IT services can change with outsourcing.

Most importantly, you should view outsourcing as an opportunity to increase the quality of IT services across your business. This means choosing a program lead who has a deep understanding and appreciation of IT services’ benefits and potential. That doesn’t mean, however, that the most technically proficient IT manager would be your best choice. You need someone who can also manage customer relationships, and who understands the outcomes that your business wants. The lead must be an outstanding communicator with potential IT services providers. Choose someone who can enable the provider to understand how the IT services align to business outcomes, and who will manage the provider as a strategy partner – not a transactional supplier.

And what are those levels? To begin, consider what services you’re currently overpaying and underpaying for. Many businesses are overpaying for in-house IT administration and support functions. Think also in terms of IT services on an as-needed basis to lower costs, get a higher level of expertise, and 24/7/365 coverage. Paying for performance also has multiple advantages over paying for specific services.

On a more subtle level, consider the costs that many outsourced providers bring along with them. Will they be constantly upselling (does the engagement team carry a sales quota or a customer satisfaction objective)? What are your costs for travel and training on your systems? Employee relationships and corporate morale will benefit if you retain as much of your IT staff as possible and then train them to provide your most valuable IT services. Consider the value of continuity to your IT services and staff them accordingly.

Regardless of the service provider’s security capabilities, their employees simply do not have the inherent incentives to keep your data secure that your employees have. So craft an SLA that minimizes the opportunities for the vendor to compromise your data, even inadvertently.

Two final points: First, be sure that your providers understand what they are doing right and that you appreciate it. Anyone in a service-providing role is naturally tuned to providing more of what their clients value most. Second, be tough. Insist on the business outcomes that drove you to outsource in the first place.

Wavestone US

Our team is a blend of former C-suite executives and industry leaders, and high-quality talent at all levels who can tackle your most complex issues with a fresh approach. With a globally connected network of 3,000 employees, Wavestone US is designed to help you get results. All our consultants thrive on complex challenges, enjoy blazing new trails, and are committed to your organization’s success.

The Case for Contract Lifecycle Management in Your VMO

Jul 22, 2021

The implementation of a mature contract lifecycle management (CLM) program allows for continuous visibility of documents and reduces the loss of their control.

Mergers & Acquisitions: Key Considerations for Technology Integration

Jul 20, 2021

There are several elements that should be considered when planning for a technology integration following a merger or acquisition.

Have a Question? Just Ask


Whether you're looking for practical advice or just plain curious, our experienced principals are here to help. Check back weekly as we publish the most interesting questions and answers right here.

Ask Wavestone