You hear it time and again, outsourcing strategies that backfire or hinder a company's ability to remain competitive in a fast-paced marketplace. Needs change, and yesterday's strategic panacea becomes tomorrow's roadblock to innovation.
Count General Motors among the companies reassessing -- and in the automaker's case, actually reversing -- its sourcing strategy. That's right, one of the biggest consumers of outsourcing services is in the process of shifting away from IT outsourcing and bringing much of its technology work back in-house.
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In light of such a dramatic reversal in IT strategy, anyone who relies on outsourcing providers to fulfill IT functions should at least think about their sourcing strategies and how they might be changed for the better.
And there are indications that the growth of outsourcing is slowing. Research and advisory firm Everest Group in August 2012 reported that the global services market saw transaction volumes dip in the second quarter of this year, following a declining trend seen over the previous four quarters.
Whether it is to increase flexibility, deliver solutions faster, or improve quality of service, organizations seeking to break free of outsourcing dependency should keep in mind that weaning off service providers is no easy matter. It involves building up internal expertise and streamlining your IT operations; for lots of companies, the move to insource can be long and costly.
Here are five tips for making your insourcing endeavor a success.
Kick the outsourcing habit tip No. 1: Soul-search -- with an eye on the long term
Insourcing versus outsourcing is too big a decision to make without deep corporate soul searching. This requires not only looking at current needs but also forecasting future requirements and IT's role in addressing them. What impact would insourcing have on achieving those goals and delivering the best products and services to customers?
"We started by looking at GM today and then looking at where we see opportunities for change and for doing business differently," says Randy Mott, CIO at GM. "Our leadership talked about opportunities to transition the way we do business in a lot of areas," as part of the lead-in to the decision to insource much of IT.
The company hopes that the move to insource more IT functions will result in increased flexibility in meeting the needs of colleagues and customers, as well as expedite the delivery of technology services.
Assessing whether your current outsourcing strategy is meeting your long-term goals is another key component of this corporate soul searching. WarSocial.com, a company that provides an online social strategy game, outsourced the first iteration of its gameboard, as well as the design of its logo and website. But the company has decided to almost completely develop everything in-house.