Decision To Outsource Should Be Made With Care, Experts Warn - InformationWeek

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Decision To Outsource Should Be Made With Care, Experts Warn

With Giga Information Group saying that outsourcing of IT projects is growing at a rate of 25% a year, a panel of experts told an audience at Giga's Infrastructures for E-Business conference Tuesday not to take the decision to outsource lightly. Too often, they said, cost savings is the deciding factor in that decision, but the bottom line should be whether outsourcing a project makes good business sense.

On a tactical level, all of the panelists agreed that project management is a primary concern. Fredric Magner, CIO of Unocal Corp., says a good project manager is often the difference between success and failure. "Our outsourcing projects are some of the most important projects we have," Magner says. "Managing outsourcing projects is a competency that's lacking in the marketplace."

Seemingly to underline this point, Alison Smith, VP of infrastructure for Myspace.com, a Web-based provider of outsourced data storage, described the dream employee in listing the skill set she looks for in a project manager. That person, she says, should have good organizational and people skills, should know when to push staff and when to pull back, and should have plenty of experience in managing outsourced projects. But even with the ideal person in place, Smith warns not to expect too much. "Don't be fooled into believing that outsourcing solves everything."

Once the decision to outsource has been made and a project manager has been selected, says Ricky Aaron, CEO of Myspace.com, it's still critical to be prepared for the worst. "What's vital is to understand how one might exit that situation if it doesn't work out," he says, suggesting that exit alternatives should be written into the contract.

Srikanth Sundararajan, CEO of Pretzel Logic, says that in the end, the success of an outsourced project is easy to determine: "Your business has to go north."

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