Making Sense of Outsourcing

One of the most pressing challenges for global businesses with operations in the United States and abroad is to sort out which IT activities make sense to do in this country and which should be done offshore.

It’s not as clearcut a decision as the headlines might lead you to believe. For now, my company is sorting out its IT relationships in North America and India.

Our consulting firm, which delivers enterprise data lifecycle management services, is based in the Chicago area, but our center of excellence is located in Bangalore. The majority of our consultants work in Canada, India and the United States, but we also do business in the Middle East and the Asia-Pacific regions.

Ultimately, we realized that hosting all of our IT in India was not the only solution. One of our early attempts to shift IT operations stateside was for hosting servers. We found that we could deliver collaboration platforms with much less latency and higher uptimes through servers located in the United States.

By doing this, we get the best of both worlds. Our North America–based consultants can access our collaboration platforms much faster. And we save money by not investing in captive data centers in the United States and on network administration by having our IT staff in Bangalore manage the servers remotely. Another benefit is that with the trends in virtualization, any time we need to add a server, instead of having our IT staff set up a server physically, our hosting solution providers can do it virtually in much less time.

Remote Installation Challenges

To provision our consultants, our IT team typically spends three to five hours installing the basic applications. In addition, this past summer, we were informed that Microsoft will stop supporting Windows XP, which created an additional challenge for us. Our critical applications run on the XP operating system and have yet to become certified for Windows 7.

The solution was that for all new PCs, instead of having our IT staff take three to five hours to reimage a Windows 7 computer for XP, we will FTP the image to CDW so they can set up the computer image for XP. When our apps clear Windows 7 certification, CDW can reimage the machines for the new operating system.

Although this entire process was established as an interim solution, it’s a partnership we intend to explore and continue because it’s cost-effective. Because our hosting company is set up to image notebooks and also provide more efficient and effective asset management, our remote IT team spends less time managing software licenses.

IT managers grappling with similar issues have to ask themselves what makes the most sense: Do you incur a capital expense to build a data center in the United States, or outsource operations to a U.S. hosting company? You also have to ask which activities make the most sense to continue abroad, in India or elsewhere. We found that the best use of our Bangalore IT staff is for worldwide tech support and centralized network management.

Although it’s still too early for us to say if we’re going to extend this model to our business in other parts of the world, our work in India and the United States is an important development. At first, it may seem that outsourcing all IT operations is the most expedient move for a global company. But as the world becomes more interdependent, managers have to look carefully at all the applicable costs as well as at the strengths and weaknesses of their teams. After you do the hard analysis, some of the answers may surprise you.