Third Case – Outsourcing Concept and The Critical Success Factors for Offshore Company

Preface

In the globalization area many companies make cooperation with external parties to meet their needs, it can be understandable, because the company basically can not stand alone. They require the supplier to obtain sources of raw materials, labor and other contracts. This is necessary so the company can better concentrate on core business activities, determining how to do more with less and also gain competitive advantage.

Outsourcing is an essential tool for every business. In fact, many outsourcing pioneers discovered that the early phase of industrialization is focused primarily within the IT environment. The problem is that sometimes the company’s capabilities in house can not accommodate these achievements, so need to outsource some processes or IT services.

IT outsourcing allows the business to focus on what really matters, meanwhile the vendor or IT outsourcing service provider focusing on their best skills of managing IT. Not only reduce cost, Implementing IT outsourcing is a strategic asset to help the companies stand apart in their markets. They seek to leverage IT as a key driver of high performance.

Accenture as a global management consulting, technology services and outsourcing company have a proven track record to provide a full range of IT needs, start from an application, design or infrastructure outsourcing to drive business outcomes.

CaseStudy

One of the largest offshore oil exploration and production company In Indonesia, operating in the Southeast Sumatra, completed its SAP ERP implementation project in 1998. The company then needed user support in applying the system to achieve and sustain the benefits of the SAP implementation. The company operates 24 hours a day, 7 days a week in an offshore location that requires high availability and reliability on its ERP and other applications. At the same time, its business environment also requires to have a highly productive information technology services in terms of quality, predictability and responsiveness. This high availability and reliability, predictable and yet cost effective information system support cost were a difficult challenge because the company did not have adequate IT resources.

How Accenture Helped

Accenture provided IT application support services, established the company’s IT business processes and managed the overall delivery of information technology services since 1998.
Accenture leveraged its IT Outsourcing Delivery Methods and IT Outsourcing Delivery Assets to ensure that the company achieves its outsourcing objectives of:
• Increasing productivity (quality, predictability and responsiveness) of IT services
• Providing access to skilled IT resources
• Increasing access to current IT technologies and best practices

What would be the benefit for the company in adopting an outsourcing concept?

Based on case study above, outsourcing services are no more related to only cost saving but have extended to offer greater benefits to the company, the benefit can be listed as below :

• Focus : By an outsourcing, it will help the company focus better on core business activities by managing other less important aspects of the business. The management in the company can spend more time managing details then actually planning and implementation.

• Cost : Reduction in cost of development is one of the biggest benefits offered by an outsourcing concept. It will reduce development cost approximately 30-50%.

• Maximum resource utilization : Internal resources of Accenture can be utilized in a manner so as to ensure skills of the resources are utilized to the maximum benefit.

• Advanced Technology : The Company will get the latest technology and best practice that Accenture implemented while delivering various services.

What would be the benefit for the company in adopting an outsourcing concept?

To be able to support the needs of the business, the company must realize there are some critical success factors for making outsourcing work. Here are some critical success factors:

• Manage the Relationship

Successful outsourcing is all about managing the relationship, there is a commitment from the management and the vendor (outsourcing company) to ensure that both parties gain the maximum benefit. Both parties should clearly understand the costs, risks and rewards of pursuing this path. There is some case that outsourcing relationships have failed. They failed because the responsibility of managing those relationships defaulted to the technical teams instead of the senior IT leadership who negotiated the deliverable for the outsourcing contract in the first place. This enables the management team to deal with problems before they get they get out of hand.

• Performance Management

The management must monitor and evaluate the performance of the outsourced service, identify all goals and objective from the beginning and this will enable the company to deal with performance issues before they get out of hand.

• Financial Management

Managing the financial management is just as critical as managing financial performance because it ensures that the outsourcer is meeting its delivery commitment for the non-IT items that are critical to the success of the outsourcing program.

• Service Value

Managing Service Value enables IT organizations to prove to the business that the outsource is delivering IT services optimized for cost and quality.

Conclusion

Outsourcing is an essential tool for every business. By an outsourcing concept the companies have the goals to Increasing productivity, reducing cost, improve reliability and predictability in the globalization area. Moreover, the company must realize that there are some critical success factors for making outsourcing work.

You may also like

Leave a Reply

Your email address will not be published. Required fields are marked *