Whatever business you’re in and however tech-centric you’ve been, you’re more so today than you were yesterday and you’ll be more so tomorrow than you are today. And so IT goes, until one day we awaken to the reality that we’re all in the technology business. At that point (and it’s not a distant one), how we do IT will be THE critical success factor in determining how well we do in business and whether we’ve earn the right to continue being in business at all.
So, if technology is increasingly part of every business’s core, can we expect to see more or less outsourcing of IT? Logic says less. After all, the business case for IT outsourcing was been built upon the premise that IT was not core to most businesses. If it is becoming so, then the case for outsourcing IT is becoming weaker by the day. Enter the case for IT insourcing.
Tech companies do all they can to protect their intellectual property, but there are serious limits in their ability to do so. The harsh reality for any tech company is that most of their true IP exists between their employees’ ears. And, each of those brilliant minds comes with a pair of legs that can transport highly valued employees to another employer (or worse, a competitor), on two weeks’ notice. Then you realize that your born again tech company is frighteningly dependent upon those techies that have so unnerved you all these years. Hmmm, what’s a reluctant tech titan to do? Outsource IT and pretend that IT really isn’t core to your business? No…
…you need to insource IT…or at least those parts of IT clearly tied to what you now consider core to your business. For example, if you’re a Big Pharma company, new drug R&D is likely core to your business. So, you should probably consider insourcing most of the IT functions that support R&D. That doesn’t mean bringing your scientists’ desktop support back in-house after years of outsourcing IT. That’s unnecessary because desktop support doesn’t create a strategic advantage within the R&D function. However, the systems by which research scientists share their findings and collaborate amongst themselves might. The design, development and support of such systems could be a good candidate for insourcing.
So, by insourcing am I saying that every person involved with an insourced function must be an employee? No, but all non-employee members of an insourced project team should be eligible for hire at any time, at the client’s discretion. Conversion terms should be straight forward, affordable and pre-determined AND there should be no “sacred cows”. Meaning, all consultants are eligible for conversion, not just a subset hand-picked by their employers. It also means that the consulting firm won’t engage in any backroom monkey business meant to dissuade the consultant from accepting a fulltime offer.
Now, let’s apply this insourcing model to that Big Pharma company’s R&D collaboration system project which requires:
- Project Manager (PM)
- Business Analyst (BA)
- QA Tester (QA)
- Developers (Qty. 4)
The client currently has a BA and two junior developers available for the project, so their insourcing partner provides a PM, a QA and two senior developers to complete the team. As the project nears completion, the client wants to convert one of the two senior developers in order to retain their critical knowledge of the system. They choose the one who had the best chemistry with the junior developers while effectively training them throughout the project. Since the BA is a solid long term employee who now possesses valuable subject matter knowledge of the new system, they believe her knowledge is sufficient to compensate for the absence of the Project Manager who’s scheduled to roll off. The QA tester, though no longer critical to the new system, did such an excellent job that the client decided to convert and redeploy him to an entirely new project. So, two of the four consultants utilized on this project were ultimately converted to fulltime employees, thereby allowing the client to retain mission critical intellectual capital created during the project and two proven performer new employees.
And that’s why we say if you think IT’s all about outsourcing…think again. Think insourcing, because however tech-centric you think you are today, you will be more so tomorrow…come to think of IT.
View our current December newsletter for more information regarding this topic: If You Think It’s All About Outsourcing…Think Again!
Why Software Is Eating The World
Everyone is a Technology Company
Enterprise IT Swings Back to Insourcing