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Move from internal contracting to subcontracting

At FAO, the IT division has been expanding its capacity to deliver IT solutions through direct recruitment of non-staff resources to meet the increasing demand. This continual increase in direct contracted resources has become more difficult to manage as it increases the burden of administrative processes. This also poses a challenge in managing and monitoring the progress of deliverables and the relationship with customers. The result we have experienced is an exponential increase in the backlog of undelivered solutions, difficulties meeting agreed-upon SLAs with customers, and a growing demand for additional people. We recently decided to look at alternative sourcing options, such as outsourcing many of our solutions and services to outside companies.

Including outsourcing as an option for delivery poses many challenges and we need to look at several criteria before taking the plunge. In this article we will discuss some of the main considerations that are being taken in the IT division in relation to this transformation.

Below are the three main advantages recognized by going in this direction:

1. A simpler and faster onboarding process

It’s getting harder and harder to find developers, more for short missions. In addition to the time required for recruiting, interviewing, and negotiating, it also involves many lengthy administrative processes that don’t allow for resources to be quickly on board, making it very difficult to leverage our ability to meet limited internal resources in a fast-paced environment.

In addition to this, the IT division is experiencing significant delays due to administrative overhead (these delays in terms of internal processes and procurement activities for new contracts is a major factor in limiting internal sourcing).

The problem of incorporation is limited in the case of external resources, it is enough to have the correct supply contracts and place an order accordingly.

2. Easy access to a global talent pool

It can be really challenging to get the right skills from our local pool of resources when a project involves new technology or when the identified internal resource is already busy on another project. Outsourcing allows finding the best qualified resources from specialized development companies, it also gives the possibility of having these resources for the limited time of the project without the need to train an employee or move a resource from one project to another. . This typically ensures better quality work with faster turnaround time and a more cost-effective approach.

3. Scalability and continuation of work

Scalability is currently our biggest problem. Some projects have tight deadlines and need a burst of additional development effort. Currently, this is done primarily by prioritizing projects and moving resources internally from one project to another or bringing in new resources that are not immediately trained and fit for the job. Launching a partnership with a large outsourcing company enables on-demand resource consumption. We can plan accordingly the amount of resources just for the project time without worrying about training, recruitment, vacations and sickness and most importantly without affecting the other projects already started. In fact, it is even possible to have development in progress while internal resources are idle or when the office is closed. This means that our clients can have access to our services when this was not normally possible,

However, moving to outsourcing could be challenging and it is important to also consider the following:

  • Clear identification of why we want to outsource

It is common knowledge to mainly consider cost reduction as the main motivation for outsourcing IT solutions to external providers, however, in recent years the industry has evolved a lot and many providers have invested heavily in the quality of their services. Our research has shown that one of the main drivers of outsourcing is generally economic, as outsourcers often offer more competitive prices for the same services with the same quality of service, whereas in the IT division, this was not the case. only factor to consider, as we also need the possibility for staff to focus on more strategic functions while having a portfolio of services provided by subcontractors.

  • emotional journey

Going from an insourcing model to an outsourcing model can be emotional, it is crucial that this experience takes place in a collaborative and cooperative environment.

For example, it is generally considered that having the resources in-house enables changes in requirements to be accommodated much more quickly and dynamically. While this may seem like an advantage, it also has many problems, such as a reduction in the discipline of providing clear and precise requirements and an adequate delivery plan.

In light of outsourcing, internal resources need to change their mindset and focus on delivering clear, detailed, and complete requirements with a clear plan that includes milestones, deliverables, and customer input.

  • Communication is key between internal and external resources

It is important to build outsourcing capacity on strong collaboration and partnership with external providers, investing adequate time during the initial stages to ensure value is achieved throughout the process.

Outsourcing development is not an easy task, it is a journey that requires clear expectations and realism on both sides.

The challenge for today’s CIO is to harness this experience to take full advantage of the full range of immediate and long-term benefits that outsourcing can bring to a company.

This could be in the form of a hybrid model where the outsourcing company is implementing a local interface and where internal resources are involved in some stages of development with the ultimate goal of ownership of the developed product, testing and implementation. It also gives the possibility to maintain and expand the product internally. So, external resources are used to deliver a product and internal resources maintain control and ownership at all stages of the process.

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