Don't Be a Control Freak

Source: Offshore IT outsourcing

Companies often go into outsourcing expecting to retain control of how the particulars are carried out. Tempting, yes. But it's a big mistake. Forcing the outsourcer to do it your way prevents your hired gun from doing what it does best—leveraging its own experience and hard-earned best practices. "Outsourcing is the transfer of ownership of a process to a supplier," Everet Group's Bendor-Samuel says. "It's different from consulting, where you own the problem but pay people to try to help you fix it."

One company that Bendor-Samuel knows of outsourced management for all of its desktop computers to EDS. Rather than letting EDS own the process, company executives insisted on retaining control of details such as exactly how many people should be on the project and which equipment they should have. "It was a very unhappy situation, because EDS was prevented from using its best practices," and the customer was frustrated by EDS's attempts to take more control of the situation, Bendor-Samuel explains. Both sides ended up wanting out, which was an expensive proposition for the customer.

Don't Bet on a Dark Horse

It's tempting to choose an outsourcer with an alluringly low price. But remember: Many of the new outsourcers have unproven track records and aren't as stable as the companies that have been around for years rather than months.

And picking a loser can have excruciating consequences. Just ask Fred Eisenberg, director of information security for Mount Sinai New York University Health, in New York City.

Two years ago, Eisenberg elected to outsource remote Internet access for the group's 4,000 physicians and other personnel. The provider he chose was new to using remote Internet access in the health-care industry but said all the right things about capacity and reliability.

Talk turned out to be cheap. The outsourcer, whom Eisenberg declines to name, stumbled badly in its performance. The service was frequently down, and the doctors—who had never had remote Internet access before—became frustrated with the long connection times. Not surprisingly, new subscribers to the service stalled at 420 out of a target audience of 4,000. When the provider abruptly decided to leave the business, Eisenberg had just 11 weeks to find a new provider. The biggest mistake they made, Eisenberg says, was initially going with a provider that did not have an established track record in his industry. "[Next] time around, we knew to look for a company that had some history in the field," he says. After an introduction via another business partner, Mount Sinai settled on Aventail of Seattle.

The take-away message from these tales of woe: When it comes to outsourcing new technology, proceed with caution. You may think the outsourcers have all the answers, but too often they don't. You'll need to weigh for yourself the risks of outsourcing a new technology versus holding off on implementing that technology. But when outsourcing is your only choice, avoiding those common mistakes will save you from a painful learning cycle.