 |
||||
|
|
|
||
|
Contents 
Outsourcing risk
High-risk areas
Mitigate don't hesitate
Written in ink?
IDC: Loss of control the biggest risk
Gartner's Oz VP sourcing |
|
||
|
|
||||
|
|
||||
Gartner's Longwood agrees that business process outsourcing (BPO) offers more risks than other kinds of IT outsourcing. "If an organisation outsources its IT infrastructure management and operations function, then typically the IT staff, usually five to 10 percent of the organisation, are directly impacted by staff transfer to the external service provider, whereas for BPO, 30 to 60 percent of staff could be affected by the staff transfer. So its easier to manage downsizing 200 IT staff to 20 or so internally to downsizing say 2000 business staff say to 600," he says.
Longwood says when it comes to BPO, often the service providers understand delivering business services but not the IT sides of things. "They often have poor SLAs and don't have good interface specifications between their systems and clients. For example, they might do accounts payable and receivable well for you but are slow or inaccurate at transferring the general ledger transactions to your internal ERP system negatively impacting the accuracy and timeliness of an enterprises profit and loss statement," he says.
Geography also plays a role, particularly on offshore outsourcing. "We see lovely figures of 40 or 50 percent cost reduction when it comes to offshoring, but unless you fully understand the risk of offshore locations, and that each one has different risk dynamics, the cost differential won't be realised," says Capgemini's Hunter.
Offshoring throws up significant extra project management overheads, with risks coming from all directions -- political unrest, socio-economic factors, terrorism, relationships with other countries, border tensions, Government policies with regards to taxes, duties and other regulations. In addition you might have to deal with cultural, language and communication issues, security and privacy, knowledge transfer, business continuity and change management, as well as the financial viability of the supplier and price inflations.
