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it outsourcing phases

4 IT Outsourcing Phases You Need To Know

IT outsourcing has become an inextricable part of the business cycle. Offloading non-core operations to lower-cost experienced experts may be a viable and appealing possibility as companies seek more rational and efficient methods of functioning. Before digging deeper, you may have to know about IT outsourcing phases to minimize the risk.

The following are IT Outsourcing Phases you should be aware of before jumping into the decision before offloading your parts of IT function to an IT outsourcing service provider. Read on!

Phase 1: Assessment
The overall goal of this phase is to determine whether outsourcing is a viable option and what the likely size and shape of the deal will be. When it comes to critical issues like overall deal scope, location, and sourcing strategies, this perspective must be supplemented with a mature understanding of the strategies to be used.

it outsourcing phases

The Assess phase ensures that due consideration is given to all key aspects of the outsourcing lifecycle, particularly with regard to:

The Assessment phase makes sure that all important components of the outsourced life cycle are taken into account. These assessments of IT outsourcing phases encompass:

  • The financial benefits provided by outsourcing deal 
  • The liability and risk that must be avoided in order to achieve a feasible outcome
  • The deal’s overall size and shape, as well as whether or not it meets business needs
  • The amount of change that both business and IT functions must undergo in order for outsourcing to be successful for the duration of the contract.

Once the initial business drivers are understood, a high-level business case has been agreed upon, and the decision to go forward with an outsourcing initiative has been made, it is tempting to rush straight into the creation of the Request For Proposal (RFP) and the design of the ‘to be’ structures

It might look very appealing to jump right into the release for the Request For Proposal (RFP) and the design of the ‘to be’ structures once the initial business drivers have been understood, a high-level business case has been agreed upon, and the decision to move forward with an outsourcing initiative has been made.

Phase 2: Preparation
This phase’s main objective is to start initiating the plan which has been defined to the point when companies have chosen possible outsourcing service providers and issued a request for proposals. The outsourcing service providers are assessed in the market, and a Request for Proposal (RFP) is created and issued. All services in scope of the procurement become carefully defined during the RFP generation process, are signed off on by key client stakeholders, and are well described within the bidding documents.

it outsourcing phases

This phase of the outsourcing lifecycle is very significant since it kicks off the first official engagement with the outsourcing service providers and outlines the client’s precise process requirements. A lot of criteria are used in a lengthy list of suppliers in order to cut it down to a shortlist. This is determined by the outsourcing service provider’s capacity to satisfy the client’s needs, which may be based on the results of a Request for Information (RFI) procedure. In the meantime, the company prepares a high-level commercial and financial framework for the deal defining key indicators of success or failure.

Phase 3: Appraisal
This phase aims to maintain feedback flow with the IT outsourcing service providers while they are reviewing their responses, and then negotiating with the vendors to reduce the number of short-listed providers to one or more.

The method used to complete the Appraisal phase will differ depending on the scope, value, and complexity of the services being procured, and the number of supporting resources required may range from a large dedicated evaluation and negotiation team to a small part-time team running a reverse bidding.

Regardless of the type of the outsourcing agreement, the focus should be on objective decision-making that leads to the short-listing of one or more IT outsourcing service providers which are best suited to provide the service completing the last piece of the puzzle.

Phase 4: Execution

The primary objective of this phase is to get the deal ‘across the line’. Many of the activities that were the main goal of this phase is to complete the contract ‘over the line.’ During the execution phase, many of the tasks started in the preceding phases should be completed.

it outsourcing phases

Conclusion
It is important to go through each of IT outsourcing phases before appointing an IT Outsourcing service provider to minimize the risk of choosing the wrong and not suitable one which may be costly for both finance and timeline. The first phase, assessment, can help companies narrow down the option of providers which are perfect to consider the benefits and the cost. The second phase, preparation, is where the plan is designed and the objectives are set. The third phase, appraisal, is the decision making process in which determine whether or not the project starts. And the fourth phase, execution, is where it all kicks off. 

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