"Outsourcing" involves transferring or sharing management control and/or decision-making of a business function to an outside supplier, which involves a degree of two-way information exchange, coordination and trust between the outsourcer and the client.
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IT- Outsourcing is not new thing. There are many companies especially in the USA already using outsourcing. It allows them to reduce expenses for development, that is why it could be attractive for market participants. But talking with potential clients in North America and Europe, I frequently encounter some skepticism about the use of outsourcing. I have tried to analyze what causes of this skepticism, and how they justified it is.

First of all it could entail a division of the potential customers into two types. And that is where I disagree with the definition of Wikipedia. In fact there are two fundamentally different types of outsourcing. First is when the companies are not related to IT, which requires a IT-solution or IT-service, and secondly, companies who want to get a project beyond their competence, or simply wishing to reduce costs by bringing in more cheap labor, often foreign.

The representatives of each of these types have their prerequisites to seek assistance from the party as well as the problems associated with it. For companies not connected with IT, alternative to outsourcing can be only the hiring of professionals, in most cases this is not very useful. On the other hand these companies have a lot of difficulty taking advantage of remote outsourcing, which is certainly much cheaper, but customers often need assistance in the analysis of requirements "on the spot". This is one of reasons for the appearance of a large number of consulting firms, which often don’t implement their own IT projects, but just provide requirement analysis and the creation of project documentation.

IT-companies (mostly referring to the North American market) more often resort to the help of sub-contractors. The availability of their own specialists allows them to correctly formulate the task, split it into sub-goals and obtain the maximum benefit from outsourcing, by reducing costs. But these companies are also faced with a set of difficulties when dealing with remote sub-contractors. Resistance, for example, can come from people working in these companies, for they could be afraid for their jobs, inadvertently competing with cheaper, and sometimes with more experienced remote specialists.

Sometimes IT-companies play a mediator role, placing an additional hardship on project management. For example, the adoption of technical solution, which needs the clients opinion, applications will have to go all the way from the sub-contractor to the contractor and from the contractor to the customer and vice versa. And in each of these three parts there is a unique hierarchy of management, when between the real performer and the person who can answer the question may be dozens of people. This is even using hi-end informational project management resources having an influence on the duration of projects.

Many of those to whom I have communicated with had bad experience of remote outsourcing or had heard about the experiences of other companies. But most of them were not trying to analyze causes, and this fact helps us to find customers and persuade them that the usage of outsourcing really greatly reduces costs and provides access to the hi-end IT- technologies.

Alexander Zverev
e-Legion Ltd., CEO
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