Insource, OutSource, Co-Source or Tomato Sauce?

When it comes to managing IT in a small to medium (or even large for that matter) organisation; there can sometimes seem to be too many choices as to how to do things.

The tough job of the IT Director (or board level member or team) is to work out which is the best path for a given company. There are many conflicting options and vendor advice is often tainted by sales pitch and ulterior motive.

Before any decisions can be made, it makes sense to think about what decision is to be taken and why this is to be taken. Here some impartial outside advice can help. At Onega, we like to be highly ethical and recognise that if we are asked to help in these strategy decisions, there may be a conflict of interest given that we are a provider of IT services ourselves. To be blunt, we'd obviously stand to gain much more if a company was to choose to outsource all their IT to us than if they chose to manage it all in house. However, we also know that what is in the client's best interests is also in our own best interest in the long run and the most efficient mutual engagement will also be the one that endures the longest as it will be most advantageous all-round.

Onega are also willing to exclude ourselves from an Outsourcing tendering competition if it would mean a conflict of interest at the consultancy level. There is a lot of value in having an impartial partner on board to 'keep the other guys straight' and ensure you are getting what you pay for in service.

So do you insource, outsource or do things jointly. Here are some bits of advice we have and factors to consider in deciding what is right for your organisation:

  • How much resilience do you need in a service? - i.e. do you need a team to cover a role to allow for peaks in demand or would it not matter so much if a service was not provided for a particular period of time.  For example,  if only a single member of staff knows a particular process, then there may be problems if they go on holiday or are ill etc. A team may also be better able to spread the load when everything happens at once which it invariably does from time to time where a single person only has so much resource and capacity.
  • How much is absolute lowest cost an issue vs greatest value? As a rule, if you have enough work to keep a directly employed individual productively engaged the whole time, then this will be best done with direct employment. An outsourced provider and direct employer would (all things being equal) offer the staff member a competitive market salary, pension, taxes, benefits etc. However an outsourced provider also has to make some profit from the arrangement and contribute towards their operational overheads (rent, admin expenses etc.) where a larger organisation would also have to pay these but is already likely committed to paying the rent and HR etc. in any case. 
  • Do you need to formalise processes? In a small internal IT organisation, it can be a perennial problem to instill the discipline to implement full management reporting, job ticketing, ITIL processes (or subsets) etc. Internally this will always be hard as when the phones are ringing (or email pinging in) the urgent matter of helping people with problems will always trump the not so glamorous formal process of documentation and formal process.   Adding an element of external support can help to embed some formal process as it becomes an inherent part of communications with and inside a client where the inside and partner organisations need to collaborate on matters. This can help get to optimal process adoption efficiency.

These are just a few factors. While the fashion is to outsource, it can be smart to do this selectively for projects and services that are outside the normal skill base of internal staff but to keep core resources in-house. There is also the motivation and allegiance of a member of staff to consider.  If an individual is working directly for an employer, then their allegiance will be to themselves, their family and then their employer; whereas an outsourced worker will have allegiance to themselves, their family, their direct employer and then their client, although as the outsourced services provider succeeds when the client is happy, this should be aligned. In some cases this might not be such a clear line.

Onega work in multiple forms of engagement with clients depending on what their needs are and what is right in the circumstances. If and where it is right though, we've had a number of successful and fruitful long term engagements with clients where our IT service desk staff augment the client's in-house resources. This can include providing overflow when it is very busy, an ear to sound ideas off (chances are that we'll already have done and learned lessons from a project you might be considering) and to provide cover when someone is off. By having the skills and engagement from a couple of Onega team members at a client site, the costs for the client are minimal (typically a reasonable minimal number of committed engagement hours per month may be agreed and beyond this we are available flexibly for your service.). This approach typically works for in-house IT staff as well as for company Finance as this helps with keeping the balance of cost / benefit without the need for drastic offshoring which a company may come to regret.

If such an arrangement might work for you then please do feel free to give us a call and we'll be happy to meet and discuss.

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