Top Three Outsourcing Initiatives for 2009

Given this uncertainty and chaos worldwide & Obama's new tax laws, still it is a good time for companies to look at outsourcing as a means to save money, propel new business ventures, and improve efficiencies. It is also a good time for companies to review, rationalize, and evolve their outsourcing programs. In light of this, the top three outsourcing initiatives for 2009 include:

1. Reviewing Deal Structures

Most current outsourcing deals and models are outdated & insffective because they are people-based and not demand-based.Companies have a need for resources to do the work that is required;they negotiate a rate with a vendor;and determine contract durations. It is easy to understand why a people-based model is being used today, since outsourcing (especially Indian outsourcing) grew out of the Y2K era.

Demand-based contracts and models are revolutionary and will drive unbelievable results if properly implemented, executed, and governed. IT organizations will become better-aligned with their business partners and CIOs will have much more flexibility in how they allocate and spend their funding.

2. Portfolio Rationalization

Portfolio rationalization has been one of the biggest trends in the application outsourcing market over the past two to three years. The industry has matured to a point where they can review their portfoilo of outsourcing partners and set themselves up with better mixes of companies,countries and models. . This is not an easy task, since every company is different and there is no cookie-cutter approach to finding the right mix of outsourcing partners.

3. Cost-Cutting

The combination of hard economic times and the maturity of the outsourcing industry will force and enable CIOs to find new ways of cost-cutting. It is important to realize that there is no silver bullet on cost-cutting and it is equally important to understand that the biggest levers for cost-cutting are not the rates themselves.

How can CIOs cut costs with their outsourcing initiatives?

Offshore to Onsite Ratios—this is by far the biggest lever in reducing the total cost of ownership of an application or suite of applications.

Time-to-Market—if products and applications can be delivered faster, companies will reap the benefits sooner. To do this, IT organizations must work with their outsourcing partners on better ways to execute projects, leverage reusable components and foster knowledge-sharing

Quality Improvements—if products and applications can be delivered with fewer bugs and defects there will be less time and money spent on re-works. IT organizations must leverage the knowledge, experience, tools and processes of outsourcing companies.

In 2009 companies will need to find better ways to leverage outsourcing to keep costs down and support business initiatives.To optimize their outsourcing partnerships, companies must review their outsourcing deal structures and models, rationalize their outsourcing portfolios, and find new and better ways to control and decrease costs.

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