ITs how ITs done

Outsourcing staff for specific functions in the IT field has become the norm now. Bringing in the outsider sometimes gets the work done faster and better.

AIDING AN organisation's business processes calls for IT departments to be on a constant vigil. Data processing, local area networks (LAN), desktop computing support and writing code are the least of their woes. Having to contend with hiring talent, training, losing and again replacing lost talent puts them perpetually in a trouble spot. To break this tiresome routine of hiring and re-hiring, companies often resort to "bringing in the outsider". Using contract staff has held a lot of companies in good stead.

Outsourcing and staff augmentation - the different ways of "bringing in the outsider", help organisations in augmenting their permanent staff. Augmented staff, also called contractors, consultants or rent-a-body firms, function as members of the organisation, while collecting their pay checks from another company. While outsourcing, a company contracts for a service, not a person. The outsourcer determines the number of people required to perform a job and the technical background they must have. Companies do not generally interview or direct the staff. IT only specifies the "whats" and not the "hows".

Staff augmentation got its first significant lease of life during the ERP trend of the mid to late 90s. Companies were on the lookout for IT professionals with specialised expertise. They contracted outside firms to either develop or alternatively rent the expertise in the form of consultants who would work with in- house staff; providing on-the-job training and knowledge transfer. The Y2K remediation projects also hired en masse a number of designers, coders and testers to tide over their needs. Contracted staff, at times, do cost more but this practice helps companies avoid the expense and pain of severing employees in a high attrition rate field.

Companies prefer outsourcing to avoid getting into legal wrangles like co-employment issues. These issues might arise out of association with lengthy staff augmentation engagements. A function is also outsourced if the work is not a core competency. For example, an IT department might decide to outsource support of legacy applications while implementing a new system or integrating a suite that will replace them. An outsourcing contract can specify that the supplier offer employment to staff whose jobs are being transferred to the outsourcer. This helps HR take care of employees even while changing their status as the organisation's employees. Either staff augmentation or outsourcing can invariably be used for any IT function. What remains to be seen is which one is the most appropriate.

Data Centre Operations (DCO) has been the first IT function that most organisations considered outsourcing. The work is typically not a core competency and the skill is a commodity. It also has a proven track record with documented successes and cost savings, both of which encourage other companies to consider it.

The support of a company's wide area data and voice networks is similar to data centre operations. Its procedures and costs are often clearly defined, the work is a commodity and there are several vendors. Outsourcing can now be used to reduce costs.

Desktop Computing Support and LANs are ideal for both staff augmentation and outsourcing. Either of the two can be implemented successfully, depending on the company's maturity level and objectives. If the IT department has little in-house expertise and wants to develop it, staff augmentation is the ideal choice. It is an effective way to bring in experts who will train existing staff. Companies that intend to outsource in the long-term must first establish procedures. Companies would do well to consider staff augmentation rather than outsourcing when the function is not yet mature. To increase the possibility of successful outsourcing, IT should first stabilise and standardise its functions, then outsource.

Companies often outsource the implementation of packaged software to the developer or to a niche service provider who specialises in such systems. This approach however requires serious consideration. The vendor is typically presumed to be the "expert" who can probably implement the software cheaper and faster than your department can. Unfortunately, such dependence on a vendor will leave the company with no apparent knowledge transfer. The vendor's support might be cost effective but the absence of internal expertise makes a future separation difficult.

A company increases its risks by outsourcing its entire new system development project, even if it plans to have the vendor provide ongoing support of the system. To retain internal knowledge of the system, a company may want to use a combination of staff augmentation and selective outsourcing. In this instance, IT would retain responsibility for all strategic decisions. It would define the requirements of the new system, working with its customers. It might outsource portions of the development, including the writing of detailed specifications, coding and unit testing; while retaining overall project schedule responsibility.

Both outsourcing and staff augmentation are not without their failings. Outsourcing is plagued by loss of control and flexibility and staff augmentation by higher costs and legal risks. However, use of either one could well mean time better spent for both IT and HR.

RADHIKA PEDDI