Deciding When to Outsource Engineering

It’s not enough to simply keep pace with innovation; you also need to establish and maintain a competitive advantage. Many organizations are facing the decision of when to outsource engineering, but others are still determined to keep all IT operations in-house.

Unfortunately, your IT team is already spread thin, so you need to find a sustainable solution that fills in IT gaps and enables your senior staff to refocus on more critical, strategic tasks.

To determine whether you are outsourcing your IT needs efficiently, compare your operations to the following IT outsourcing checklist.

1.  How consistent are your IT needs?

• Do you have seasonal needs that require temporary staffing to handle the load?
  • g. Increased support needs during fax filing, immigration law, retail (Christmas, holidays, etc.)
• Are you experiencing rapid growth?
• Are your day-to-day workloads established and steady?
  • Are your IT tasks easy to estimate and cost out?
  • Is your ITIL standardized across all locations and for all processes?

Considerations: By outsourcing known tasks, you free up key, knowledgeable resources to address critical business line projects and your senior staff (L4-L5 engineers) to focus on strategic work and competitive initiatives.

2.  How do you prioritize between routine maintenance and creative technical problem solving?

• Does your standard operating model allocate certain workload percentages to the strategy and execution side of production?
  • g. 20% to exception management and 70% to execution strategy.

Considerations: You can take advantage of economies of scale—saving up to 30%—by outsourcing a large portion of your standardized, day-to-day IT tasks.

3.  What are your HR requirements for 1099 and W2 employees?

• Do you have restrictions that only allow you to contract W2 employees?
  • Do you have the management infrastructure to handle payroll, insurance, benefits, etc.?
• Do you use 1099 contractors regularly?

Considerations:

1099 labor is often less expensive due to scalability and the lack of payroll taxes, but contracted employees are often less standardized. You have less control over quality management, and you do not have the assurances of company-mandated insurance policies.

W2 provides more control over the types of work that your outsourced labor can do, and you have the assurances of comprehensive insurance and coverage.

4.  How do you currently manage external vendors?

• Do you have a contract management team?
• Do you have a strong internal PMO?
• How many vendors do you currently manage?
• How much does managing these vendors cost your organization?

Considerations: In the past, companies have been wary of contracting with a single (full lifecycle) vendor for fear of vendor monopoly and control. However, having numerous vendors can add 30%+ to the cost of outsourced services due to individual overhead, redundant/unnecessary services, and management complications.

5.  Does your company have global needs (or ambitions)?

• Do you have multiple, global locations that need standardized IT support?
• Do you outsource IT services overseas?

Considerations: Due to upfront cost savings, overseas outsourcing was very popular in recent years (until its significant drawbacks were revealed in practice). You must accommodate for massive communication delays and other management complexities that counteract any cost savings you would benefit from.

6.  Will you benefit from “insourcing strategy,” but “outsourcing execution”?

• Do you prefer to keep strategy in-house and outsource operational components?

Considerations: Fully-outsourced certainly has its benefits as it relieves pressure from your in-house teams—but be prepared to lose control of your ITSM processes as a result. Large-scale providers like IBM and Accenture don’t have the bandwidth to conform to your established processes; they simply implement their own. This causes you to lose your competitive advantage because everyone else who is leveraging IBM outsourcing is operating on the same strategies.

We Know You’re Being Asked to Do More with Less

And, so far, hiring new W2 engineering talent and contracting with myriad vendors hasn’t helped with your margins. If you saw more pain points than solutions in the checklist above, it’s time to consider a different method of IT support.

When applied for the right reasons, global contingent labor reduces your overall IT spend by 30-40% and enables you to remain in full control of your IT processes. CentricsIT has the global infrastructure to meet your competitive outsourcing demands.